A highly competitive market for specialty insurers has driven major investments in big data analytics, agent portals and legacy systems replacement, new Novarica research finds.
In its study, “Business and Technology Trends: Specialty Lines”, the tech-research firm analyzes 57 technology investments recently made by specialty insurers to gauge trends in the industry. Novarica found legacy systems stand as the biggest roadblock in selling policies for mid-size and large specialty carriers in loom of increased competition from banks and foreign corporations.
Much like life and P&C lines before them, specialty carriers look to improve underwriting processes with augmented systems that rely more on new metrics such as credit scores, rather than traditional data that takes longer to gather. The result is a more flexible system able to rate, price and organize unstructured data to get products out quickly, Novarica says.
“Specialty insurance is part of the third wave of innovation in financial services. Ordinarily, new tech goes through banks then P&C before reaching life and specialty insurance,” said Mitch Wein, VP of research and consulting at Novarica. “Carriers have to respond to survive. Legacy systems are only able to process a part of new products, meaning they have to be adjusted manually, adding cost and risk.”
Novarica identified policy admin, rating engines, billing, and business intelligence as top priorities for specialty insurers in 2016 and beyond. Carriers are also placing greater emphasis on agents, even more so than customers, Wein says. The goal is to underwrite, price and quote products as quickly as possible for brokers to sell.
“Agents expect smooth quoting application submission, efficient download upload services and general information to be prefilled,” he said. “The more you benefit the agent the more likely they are to come back to you. But turning products around quickly puts too much pressure on current admin systems.”
Going forward, specialty insurers will be greatly impacted by new tech, Wein says, especially as it relates to the Internet of Things. Specialty carriers will use the incoming data from customers and third parties to predict losses and alter offerings.
“As more products such as boilers, you name it, continue being built with sensors, data flow will increase,” he said. “And carriers will likely give customers discounts on premiums for access to it.”
