For P&C insurers, digital technologies are “recalibrating” customer expectations and opening new ways to acquire and retain policyholders, and most insurers are taking notice, according to EY’s 2016 P&C insurance industry outlook.
The report, authored by David Hollander, Thomas Cranley, Gail McGiffin, and Jay Votta, identifies eight areas that P&C insurers will focus on next year – and technology is at the core of many of them.
“Every one of our clients continues to make major investments into modern [technology] architecture,” says Hollander, who is EY’s global insurance advisory leader. “Anything that helps enable digital interaction, data and analytics, the product development side, claim handling, or customer interaction is a high priority.”
Core systems replacement is crucial to insurers because they need to have the right platform on which to leverage emerging technologies like big data, analytics, telematics and more, Hollander adds. In addition, insurers are hiring new kinds of IT executives in order to get the most value out of the new data sources.
“How are you going to take advantage of that data for underwriting and pricing?” he asks. “That’s where you see the rise of the data scientist. These types of data don’t have actuarial models behind them.”
Another factor driving innovation: Insurance companies recognize that a number of outside companies are looking to carve out their own section of the insurance value chain, says Hollander. Those include not just startup companies, but also established players, like auto manufacturers and telecoms, who are using their own innovations to offer insurance-adjacent products and services.
"Many of the forward thinking carriers we are working with have formed venture funds, and they're making investments in startups," Hollander says.
The eight focus areas EY identified are:
- Position organizations for digital leadership.
- Prepare for the next wave of M&A activity
- Create a culture of continuous innovation.
- Shift from a product to a service orientation.
- Build a next-generation distribution platform.
- Improve performance through analytics.
- Develop the right talent to lead change.
- Make risk management a C-suite priority.
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