COVID-19 has accelerated the insurance learning curve

It has been two years since the World Health Organization (WHO) officially declared COVID-19 a pandemic. I think we can agree the intervening months have confronted us with scenarios few of us had ever imagined. How well we navigate the next global challenge in Life and Health hinges on making sure we don't forget the lessons learned during this one.

Back in November 2020, we at Swiss Re had the opportunity to take stock of the initial months of the pandemic, as well as make some predictions about what the next phase of COVID-19 was likely to bring for the insurance industry. After all, that is what insurance comes down to: Leveraging the best possible data to make sound judgements about the future, so we can help protect people against risks that threaten their lives and livelihoods.

I remember that moment as a critical one in the COVID-19 crisis: The second deadly wave of infections was underway, as the Northern hemisphere prepared for a difficult winter. Across society, our uncertainty over the course of COVID-19 persisted. But there was also hope on the horizon. By the end of that November, vaccines to prevent severe disease and death showed high efficacy in clinical trials after being developed in record time. Some of these vaccines emerged from novel partnerships between industry and academia.

This dynamic environment, where the pandemic has delivered surprises that demanded we be agile and creative, persists today. It has reminded us that we must ask tough questions about how resilient we truly are as a society, and to seek out solutions to address our vulnerabilities.

COVID-19 has taught us many things. It demonstrated how quickly a few local cases of a previously unknown disease can spread around the planet. It showed us logistics systems for essential protective equipment or tests often struggle to weather a disruption that touches every corner of the world at once. And we learned people behave in unexpected ways to requests or orders to stay home, to wear a mask and to get vaccinated.

For most of the world, this pandemic established that we need no longer rely solely on face-to-face meetings in the office to conduct our business. Travel, for business or pleasure, should no longer be taken for granted. As visits to the shops, a park or a friend's house were put on hold or limited, we suddenly learned how precious these simple things really are to us. Many of us learned how fragile mental health can be when our lives are disrupted.

For us at Swiss Re, there were a couple of additional, important takeaways.

First, that when a calamity of this magnitude occurs, affecting the entire planet simultaneously, the re/insurance industry stands ready as a shock absorber, to support societies in their efforts to bounce back as quickly as possible. The pandemic has been admittedly very tough on Life and Health insurers and reinsurers, but we will make it through, grow stronger, and continue our mission to be there for our clients when they are struck by tragedy.

Secondly, it has also underscored the importance of listening to customers as we adapt products and services to fit a swiftly changing insurance environment. That's why we have been taking the pulse of consumers as the pandemic progressed, to understand what they value from us as an industry in the wake of this once-in-a-generation health crisis.

Moreover, it also reinforced for us the important role that public-private partnerships should play in helping to mitigate risks associated with future pandemics, which we know are rare but will inevitably revisit us. Though we have the ability to model pandemics – Swiss Re has had an evolving pandemic model since 2006 that considers 50,000 scenarios – we also know the sheer scale of such events means there are limits to how much any one actor can contribute.

That's why collaborations between governments and industry – the kind we do regularly to help protect vulnerable regions from many forms of natural catastrophes – are a potential tool we should consider as we look to manage pandemic threats that are still over the horizon. We're already helping provide insurance aimed at bolstering the viability of the World Health Organization-backed COVAX programme delivering vaccines to developing countries.

As we prepare for the somber 2-year anniversary for the WHO's declaration of COVID-19 as a pandemic, I think it's accurate to say the world has arrived at another important inflection point.

Since late 2021, we have endured the most-infectious version of COVID-19 yet: The Omicron variant. While this mutation has caused record numbers of infections worldwide, early data so far suggests that Omicron causes more moderate disease than that which was caused by the Delta variant. Whilst still tragic, it seems that hospitalisations and deaths did not rise at the same rate as with prior variants, particularly for those who have been vaccinated.

While it may still be premature to call Omicron a global game-changer,  its behaviour has fueled optimism among many that we are on the verge of shifting to a world where COVID-19 is endemic, not pandemic. You see governments around the globe gearing up for "the new normal" including an end to contact tracing, and the resumption of tourism and events with large crowds. Indeed, I’m writing on the day that the Swiss authorities removed the need to wear masks except on public transport and in healthcare facilities.

Given the significance of this moment where we find ourselves two years on from the WHO's pandemic declaration, Swiss Re plans in the next few weeks to share some of the insights that we have learned, so far, and where we think this journey is taking us. We see Swiss Re's evolving risk knowledge, based on data we have collected and analysed since the crisis began, as helping guide our clients and their customers through the next phase of COVID-19.

To be sure, there is still much uncertainty – the pandemic is not over just yet. There are still plenty of risks, and I worry about an uneven recovery from country to country and region to region, in particular as vaccines are still taking their time to reach the developing world, adding to concerns that new, significant COVID-19 variants could emerge.

Still, we have long held the view that the post-pandemic insurance markets will rebound more quickly than they did following the financial crisis of a decade ago. The outlook for global insurance growth is positive, with above-trend growth expected over the next two years as risk awareness from the shock of COVID-19 spurs consumers to protect themselves from uncertainty.

One thing is certain: being better prepared for the next crisis will depend on how well we deploy the hard-won knowledge gained during the current one.