New habits and innovation – a revitalised post-COVID insurance industry

The past year has been one spent shadowboxing an invisible and mutating foe. A year of multiple lockdowns, social distancing, digital overload all taking place under a gloomy cloud of anxiety, uncertainty and fear.

But as we move into a brighter, more optimistic phase, I want to share why I envisage a global insurance industry that will experience an explosion of innovation over the coming months and years and will be a better industry to work in.

Something which has stood out for me this year is how we, as humans, have had to learn new habits. In this article, I will explore what these new habits are and why they will drive fundamental change in the insurance industry.

Optimism returns, bringing with it, innovation

There is a lot to be optimistic about at the moment. The UK will soon complete the rollout of its vaccine programme, probably making it the first European nation to do so. It is on the cusp of a return to ‘freedom‘ and other nations will soon follow. People can look forward to reconnecting in person with friends and family, and a return to the office but with more scope for remote work. There is a historic, shared societal relief that the end of the pandemic is in sight, and a renewed appreciation for the freedoms we once took for granted.

Innovation and optimism are best friends, and we are about to enter a generational opportunity to innovate.

Will we revert to old behaviours when things return to normal? I believe the answer is no.

The emergence of new habits

“The chains of habit are too light to be felt until they are too heavy to be broken”

Samuel Johnson

Habits are persistent behaviours that do not disappear easily. You would have heard that it takes just 30 days to create a habit (it’s actually more like 66 days[1]) and we have had over a year of exceptional circumstances. To revert to how we were before the pandemic would entail breaking already established habits.

The pandemic has resulted in abrupt, universal changes in our habits: remote work, digital connection and broad adoption of preventative measures such as mask-wearing. These habits, adopted out of necessity over the past year, have become ingrained and are likely to last well beyond our experience of the Coronavirus.

When new behaviours and habits meet a wave of optimism you have the perfect conditions for positive change. The coming years, therefore, are set to deliver an unprecedented explosion of innovation in the insurance industry. An industry that has been slow to adopt change has had change forced upon it by the global pandemic.

For innovators and thought leaders, the coming years present a rare opportunity for insurers to transform their businesses both internally and externally. The key to unlocking this potential is to understand the fundamental changes afoot.

That means looking at what new habits have been formed.

1. The habits of working remotely

“In teamwork, silence isn’t golden, it’s deadly”

Mark Sandborn

Isn’t it lovely to skip the morning commute? An extra hour with family or to exercise (or just lie-in). On the flip side, haven’t we developed a new appreciation of the value of working in person with colleagues and going into the office for a change in scenery?

Before 2020, the traditional insurance industry didn’t do ‘remote working‘. Concerns around data security, access to on-site computing resources and trusting staff to work without being under the constant and watchful eye of managers meant that working remotely was not an option for most insurance professionals.

“One of the secret benefits of using remote workers is that the work itself becomes the yardstick to judge someone’s performance.”

Jason Fried

After a steep ‘learning curve’, insurers have now successfully developed the capabilities and techniques needed to work remotely. A year of insights and refinement have created new techniques for dealing with remote work challenges: ensuring teams and individuals don’t go silent; how to make a decision without the benefit of being in person with colleagues; communicating in a semi-natural manner as a group of people on a conference call; collaborating on projects and deliverables; learning that separating work and home life is at first an intentional decision that eventually becomes a habit.

These habits are powerful skills that the insurance industry did not have the benefit of before the pandemic. Putting them to use now, though, has the potential to improve productivity and happiness in the work environment. How effective insurers are at leveraging these new habits in the future will influence their ability to attract top talent,[2] work efficiently and innovate successfully.

All this will impact how insurers operate, but what about the new behaviours in insurance customers?

2. The habits of digital adoption

The rise of the digital consumer has been well documented albeit generally skewed towards younger age groups: primarily millennials and Gen Z. We have seen an exponential rise in digital adoption, accelerated by the pandemic. The average person’s screen time has surged during the pandemic by over 60%.[3]

Some of these habits have merely been strengthened (especially for Millennials who were already familiar with digital mediums) but for older generations, the surge in screen time and use of digital tools for new uses has made them far more comfortable as digital natives. In many ways, the pandemic has reduced the “digital divide” between generations.

Habits such as paying for services online (grocery delivery and ecommerce), downloading and learning how to use specialised applications like Zoom and generally relying on digital devices for news and entertainment have taken hold.

And what are the implications of this unprecedented digital adoption?

  • An increase in comfort with digital engagements means that insurers can more easily distribute and explain their products to consumers. The cost of acquiring and servicing customers is reduced, which means that the unit economics of offering lower margin products suddenly make sense.
  • A digital ecosystem fosters considerably more innovation as it enables products to complement one another and gives rise to new products (known as “composability”).
  • More innovation and deeper integration lead to products that are more attuned to consumers’ individual circumstances. This trend is already flourishing in the Fintech space, with newcomers finding ways to appeal to changing consumers. Insurtech will see a similar trend, hastened by the pandemic.
  • Finally, a digitally native customer base will expect a digitally native insurance experience.

Much of what we consider insurtech, really revolves around how customer expectations and behaviours have changed in a digital world. The increase in digital adoption over the past year has accelerated this change.

Finally, we must consider how habits impact the very nature of insurance risk.

3. The habits of preventative health

Health care is expensive and ageing populations place an additional burden on already overextended medical systems. It is, therefore, crucial to prevent people from getting sick in the first place: a healthy diet, regular exercise, sanitation and mental wellness are a few of the behaviours which prevent illness. The difficulty has always been in encouraging these behaviours so that they become social habits.

There is that word habit again.

Will the handshake survive Covid-19? Will the wearing of masks persist in cities and on public transport? Will the hug make a comeback? No one has the answer to these questions, but what is certain is that unprecedented global public health programmes have informed the public on how to prevent the spread of germs. Proximity to others, effective sanitation, nutrition and a host of other behaviours have been front of mind for the past year. This knowledge and these new habits of prevention will surely remain in some form or other, affecting various aspects of the industry, including:

  • A more health-conscious consumer may have a more positive perception of wellness and preventative health products. Wellness offerings might experience greater adoption or appreciation.
  • As people return to the office, employee benefits offerings similarly have an opportunity to cater to these behavioural changes and new perceptions of what constitutes value. This presents an opportunity to introduce new product design features or access new sources of scale.
  • Beyond just being more appreciated, behaviourally guided insurance interventions and wellness programs can leverage/encourage these new behaviours.

Over the coming weeks, I will be delving into each of these habits in more detail and will focus on how insurers can leverage them to seize this moment to innovate.

MBE transforms actuarial performance. As a team of actuaries, entrepreneurs and systems experts we believe that the insurance industry is undergoing a fundamental shift as the various new forces encompassed in insurtech gain momentum. We partner with insurers to create a culture of continuous innovation which will be crucial to the prosperity of the insurance industry in the years to come.

Contact us to discuss how we can help you innovate your business.


[1] Lally, P. et al. How are habits formed: Modelling habit formation in the real world. Eur. J. Soc. Psychol. 40, 998–1009 (2010)

[2] The National Alliance Research Academy’s The Pulse of Customer Service in 2017 found that the top most mentioned work trait being flex time. The second most often mentioned benefit was the ability to occasionally work from home. 60% of respondents specifically mentioned these two key benefits.

[3] Carroll N, Sadowski A, Laila A, et al.: The Impact of COVID-19 on Health Behavior, Stress, Financial and Food Security among Middle to High Income Canadian Families with Young Children. Nutrients. 2020; 12(8): 2352.

Tyron Fouche