WEBINAR: THE IMPACT OF COVID-19 ON INSURERSSession 7

14 May 2020

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OUR PANELISTS

John-Paul Pape Partner, Organizational Effectiveness London

Rupal Kantaria Director, Oliver Wyman ForumLondon

Dennis Layton Partner, Organizational EffectivenessLondon

George Netherton Partner, Head of UK &Ireland Insurance London

Olivia Richards Principal, OrganizationalEffectivenessLondon

Greg Rung Partner, Financial Services Dubai

Damien Renaudeau Partner, InsuranceParis

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WEBINAR AGENDA

00 Introduction 5 mins

01 Mega trends and the long term impact of the crisis 15 min

02 Global Cities – Impact of relaxing lockdown levers 15 min

03 Getting it done – Can productivity levels be maintained 15 min

04 Additional Q&A 10 min

MEGA TRENDS AND THE LONG TERM IMPACT OF THE CRISISPanelists: Greg Rung and Damien Renaudeau

01

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ENTERING AN AGE OF ACCELERATION: MOVING AT UNTHINKABLE SPEED IS THE NEW NORMAL

PRIORITIZE PEOPLE

MAKE MEGATRENDS MATTER

BUILD RESILISENCE TO EXPONENTIAL

CHANGE

MULTI-STAKEHOLDER CAPITALISM

• Continue to motivate people through economic hardship

• Common goal, revised targets and bonus schemes, wellness, flexible hours

• Megatrend should not be left to experts• Independent board directors, dashboards,

megatrends included in strategy formulation

• “Just-in-time” operations are broadening into “just-in-case” coalitions

• Reduce complexity and externalities

• Move swiftly even as governments, as major creditors, press for progress along new environmental and social metrics, in addition to financial strength

• Decisions made at a pacepreviously thought impossible

• A new world standard for efficiency and innovation

• A new breed of company, more capable of playing offense and defense in uncertainty

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WHAT THIS COULD MEAN FOR THE INSURANCE SECTOR

PRIORITIZE PEOPLE

MAKE MEGATRENDS MATTER

BUILD RESILISENCE TO EXPONENTIAL

CHANGE

MULTI-STAKEHOLDER CAPITALISM

• Durable changes to work environment and ways of working • Increased awareness of employees’ mental health and wellness• New engagement and development models• Opportunity to support Quality of Work Life efforts of corporate clients

• Help companies better understand megatrends and how to mitigate them: new risks, new products, more prevention, improved risk management

• Identify new opportunities emerging from mega-trends for insurers: digital acceleration, increased importance of health and wellness, new customer expectations and needs

• Operating model adaptations to ensure improved resilience (distribution, admin processes, automation, …)

• Shifts to insurance value chain / supply chain, with new co-operation and coalitions models

• New sources of revenues and businesses to complement core

• Importance of impact of the insurance industry on society following its perceived role and contribution during the crisis

• ESG factors becoming a critical component of strategy

POLL

Panelist: Greg Rung and Damien Renaudeau

Q&A

GLOBAL CITIESIMPACT OF RELAXING LOCKDOWN LEVERS

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1. Immediate-term horizon:

– Understanding macro scenarios and upcoming outbreaks

– Defining a common frame of threat levels

– Maximising economic participation as we step down through threat levels

2. Short-term horizon: how to practically lift the lockdown

3. Longer-term horizon: defining city strategy and proposition

WE’RE SUPPORTING CITIES WITH THREE KEY CHALLENGES WHEN RELAXING LOCKDOWNS

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1. LINKING MACRO THREAT LEVELS WITH ECONOMIC IMPACTS

OW developed analytics engine that models:

• Outbreak scenarios

• Sector and firm level financials under bespoke Covid-19 scenarios

Source: Oliver Wyman Analysis, https://www.imperial.ac.uk/media/imperial-college/medicine/mrc-gida/2020-03-30-COVID19-Report-13.pdf, (https://www.thelancet.com/journals/lanchi/article/PIIS2352-4642(20)30095-X/fulltext

Macro scenarios

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~2 Months 12+ Months

Initial Outbreak Long Haul of Suppression

Ca

se G

row

th p

er

Da

y

Therapeutic breakthroughs (treatment, vaccine) and scaled public health tools (diagnostic testing, contact tracing with selective quarantine, national surveillance system) allow return to New Normal with emphasis on immediate Containment at first sign of new outbreaks

• Cycles of relax/tighten suppression measures• Social distancing acts as the only ‘brake’ and we

learn from each cycle what has greater/lesser impact on virus spread

Mit

iga

tio

n/E

con

om

y • Closure of non-essential businesses

• Community-wide stay-at-home mandates

• Widespread remote work

• Border closures and travel restrictions

• Gradually reopen some business (e.g., retail / restaurants/ manufacturing with social distancing and cleaning/protection protocols)

• Stay-at-home order for at-risk people

• Remote work still the norm

• No large gatherings (e.g. no events >50 people) so churches, sports, entertainment venues remain closed

• Travel to / from hot spots restricted

• All businesses re-open, under mandated safety protocols

• Stay-at-home reinstated in areas with renewed outbreaks

• Prevalent use of vaccines, perhaps annually

Phase 1

Phase 2 Phase 3

Containment

2. SHAPE OF SUPPRESSION (2 OF 2)COVID-19 will exert its influence on our economy for many months ahead

Made these ‘useful’ by introducing ‘response zones’ which correspond to threat levels

Threat levels

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1. MAXIMISING ECONOMIC PARTICIPATION BY CHOOSING APPROPRIATE LOCKDOWN LEVERS

Source: Oliver Wyman Analysis, https://www.imperial.ac.uk/media/imperial-college/medicine/mrc-gida/2020-03-30-COVID19-Report-13.pdf, (https://www.thelancet.com/journals/lanchi/article/PIIS2352-4642(20)30095-X/fulltext

High

Low

HighLow

Eco

no

mic

imp

act

R

Workplace at intended level

Schooling at intended levelWorking remotely encouraged

Nurseries and primary schools reopen

Non-essential retail businesses open

Contactless hospitality and leisure business

1

3

C

2

3

4

Illustrative

Lockdown lever decision matrix

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2. LOCKDOWN CITY REALITIES AND ACTIONS

Reality Action

Avoiding 2nd wave means returning to offices likely difficult in 2020. Large businesses could re-think their city location

Re-evaluate city strategy collaboratively with the private sector

Professionals could consider moving out of cities, which threatens to disrupt ecosystem and widen inequality

Plan how to make the ‘new normal’ of remote working attractive in a city context

Many people are scared to return to workplaces1. Costs to make them feel safe prohibitively high for some businesses

Design set of workspace guidelines that prioritizes both employees’ safety and business viability

Economic upside from opening non-essential retail may be low due to low consumer demand and viability with business rates

Raise potential for government to provide support such as business rate relief

Parents are significantly less productive with small children at home, and most primary schools are local

Pilot opening primary schools

2m social distancing means tubes/buses operate at ~14% capacityReview implications of reducing 2m distancing, and other measures that can be combined

Re-opening secondary schools could take-up much of London’s available bus capacity

Continue online learning during social distancing

1

2

3

4

5

6

7

Draft

Global Example London specific1. MSNBC as of April 25 2020, Mercer as of April 27 2020, Fishbowl

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3. POTENTIAL MEDIUM-TERM CYCLE OF DE-URBANISATION

Short-term behaviour change

Medium-term shifts - cycle of de-centralisation

Professionals (wealthy and most mobile) start moving

out of city centres

New localised threat: Offices / shops don’t return

for prolonged periods of time

Offices relocate in country or abroad to reduce costs / tax

Decline in footfall/demand/higher costs

means shops shut permanently

Lack of possible investment by local

authorities

Spiral of decline

New industries and businesses reluctant to

locate

Poorest sectors of society left behind in the inner city

1

2

4

• Office-based employees encouraged to work from home until Xmas

• A/B teams means those in office ~2-3 days a week

• New virtual ways of working surprisingly productive

• Some professionals temporarily relocate outside city centre

• Mindsets start to shift on benefits of staying central

Illustrative

3

Drivers

POLL

Panelist: Dennis Layton and Olivia Richards

Q&A

GETTING IT DONE -CAN PRODUCTIVITY LEVELS BE MAINTAINED Panelist: John Paul-Pape

03

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CONTINUING TO ‘GET IT DONE’ – CONTEXT AND HYPOTHESES

Context

Let’s start by examining why are we getting so much done?

01 Crisis: Compelling reason to change creates Urgency Clarity and Focus on what’s essential

02 Narrower breadth of work, executed to more depth

03 ‘Command’ style leadership more acceptable

04 Autonomy to act

05 Values and Beliefs have changed

Is it right to expect that we can continue to main these higher levels of productivity?

Current productivity levels are extremely high

“What took 6 months is taking 2 weeks now”

“What was impossible is now being delivered”

“Things are getting done much more quickly”

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• Continuing at current levels is not sustainable

• But being much more productive than pre crisis is possible IF certain conditions are met

– Clarity and Focus

– Inspiration vs Crisis to create Urgency

– Care and performance

– Volume of work

– Leadership, permission and autonomy

– New beliefs

CONTINUING TO ‘GET IT DONE’ – ACCEPTABLE AND ACHIEVABLE

So is it acceptable to expect our employees to maintain these levels of productivity?

So how might we think about achieving sustainably higher productivity and performance?

A final thought We cannot solve our problems with the same thinking we used when we created them

An overarching approach

• Crystal clear outcomes• A compelling why / purpose• Massive action• Measure and adjust

Activities

• Catalogue: critical, necessary and stoppable

• Redirect and eliminate workflow

• Adjust processes and structures

Mindsets

• Clarity of purpose

• Consistent reinforcing narrative

• Values and beliefs

• Leadership to create intent, autonomy and permission

No Yes &

Panelist: John-Paul Pape

Q&A

Q&A FOR ALL PANELISTSModerator: Rupal Kantaria

04