If there’s an upside to the pandemic it’s that the use of technology and digital assets has accelerated and expanded at a rapid pace. While this trend was already underway before COVID-19, we’re now into year two of a global remote working experiment made possible by Webex, Zoom, Slack and other platforms. There are numerous examples of where digital transformation has been critical to business continuity in the pandemic. Telemedicine and virtual schooling come to mind, and the neighborhood family restaurant pivoting to online ordering and curbside pickup and delivery. The shift to e-commerce has been unmistakable, especially if the frequent UPS delivery truck runs and package deliveries to nearly every doorstep on neighborhood streets is any gauge.

For risk managers and insurers, the pandemic has driven many to speed up their digital approaches. In a tough commercial insurance market especially, it is easy to see how an online renewal could prove difficult. Yet several risk managers tell of online negotiations with their insurers that were enhanced by the digital process because they allowed for greater efficiency and a personal connection to be forged in a work-from-home setting that previously had not been possible. This suggests a blend of technology and human interaction may be important. Meanwhile, for insurers the pandemic has seen a shift in policyholder behaviors and expectations. The need for speed and touchless claims handling has been aided by technological advances that automate processes, though challenges will be inevitable. The industry’s ability to mobilize and work remotely in the early days of the pandemic was critical for business continuity, but the question now is how to sustain and adjust digital efforts to support long-term delivery of new insurance coverages.

Fortunately, as highlighted in this issue’s risk management innovation special report, there are some promising signs of innovation as the industry looks to better manage emerging risks and to respond to what insurance buyers need going forward. Who would have thought a year ago that vaccine-tracking technology would be a thing? In addition to cloud-based tools to help employers keep track of the number of vaccine doses an employee receives, wearable devices are playing a role in keeping workers safe and in compliance with Centers for Disease Control and Prevention coronavirus guidelines. In any future pandemics, these will surely be used more widely.

As commercial insurance prices continue to rise, policyholders are also seeking alternative coverage. For strained natural catastrophe and non-physical-damage business interruption risks in particular, parametric insurance appears to be taking off. In such a contract, policyholders are insured against a specific event with the payout pre-determined and claims triggers based on index data points, such as rainfall or hail measurements, magnitude of earthquake, or reduced foot traffic levels related to a policyholder’s business exposure. In this way the coverage is designed to pay based on an event occurring, rather than the level of damage incurred. While in the past, risk managers have said cost was a barrier to buying parametric coverage, ever-tightening commercial insurance market conditions appear to be closing that pricing gap. A hallmark of parametric coverage is the faster payout. Because it eliminates the need for claims adjustment, payment under a parametric coverage can be made in weeks, versus months or years with a standard indemnity contract. After more than a year of claims denied and lawsuits filed for business interruption coverage related to COVID-19, it’s not surprising that the parametric alternative is gaining momentum.