20 May 2020
Our inaugural roundtable for Insurance NEDs provided some real insights on lessons learnt so far from COVID-19 and how firms could emerge stronger and better prepared for the future. With that comes some challenges that firms need to think through carefully.
Without exception, all of the attendees agreed that operational efficiencies were the biggest positive arising from the changes that the pandemic had forced upon firms, including the following:
- Firms are finding that remote meetings lead to quicker decision making.
- The majority of employees are adopting working from home as “business as usual”, perhaps working longer but still saving time by not having to commute.
- The success of remote working also creates opportunities to provide a better work/life balance to employees including making it easier for returners from long-term absence, e.g. maternity leave, to phase in their return to work.
- There is an opportunity for substantial savings in office costs. Demand for office space may never be the same again.
But quicker decision making brings its own risks. Assessing multiple opinions to ensure all angles are covered takes longer when working remotely and, if this time is not taken, some potentially poor decisions could be made.
Also, COVID-19 is making firms highly dependent on certain technologies in order to survive, and so it is essential that the solutions chosen are robust and future-proof.
While firms have been forced to react quickly to the impacts of COVID-19, the one-off efficiency savings may not be repeatable in future. Firms will need to think differently in order to compete in a world where consumer needs and behaviours have probably changed forever.
And what about the impact on people?
Working from home is not for everyone. People are missing leadership and comradeship and, sometimes, being told what to do. Is there a trade-off between a better work/life balance and a potential lack of team spirit and sense of community?
Another challenge is how senior leadership will maintain the firm’s shared values and avoid sliding into a culture of individuals doing their own thing.
How is the role of NEDs changing in light of COVID-19?
Insurance NEDs are increasingly challenging boards on how they are looking after their people. It is comforting to see that, in these unusual times, not only do NEDs have their hearts in the right place, but it also makes good business sense.
As one would expect, many of the questions asked by NEDs are around risk assessments e.g. revising business forecasts or assessing the liquidity or financial impacts due to the pandemic. These questions require quick responses and the volume of information provided to NEDs has increased. Clarity and brevity are more valuable than ever.
Finally, the risk of “role drift” for NEDs increases when the issues are urgent. It remains vital for NEDs to preserve their objectivity and not get drawn too deeply into day-to-day issues.
Please get in touch if you would like to come along to our future Insurance NED roundtables for some thought-provoking discussion.