Developing a unified digital strategy in personal lines
Property/casualty personal lines are under pressure unlike any other time in history. The risk landscape is evolving as some circumstances result in increased losses (distracted driving, increased CATs), while others hold the promise to dramatically reduce risk (autonomous vehicles, the IoT). Customer expectations and demands continue to change. Emerging technologies offer new opportunities to manage risk and improve operations. New competitors and partners are surfacing every day via InsurTech startups and greenfield insurance ventures. But the industry is not standing still. Personal lines insurers are actively pursuing a dozen strategic initiatives that are propelling them forward to a stronger competitive position in the future.
The strategic initiatives include both traditional initiatives, such as business intelligence and core modernization, and new world initiatives like investments in InsurTech and a digital strategy. Creating a unified strategy with the right blend of traditional and new world initiatives is the challenging task of senior leadership today.
Three of the traditional initiatives are farther along in the implementation and deployment lifecycle: core systems modernization, business intelligence, and advanced data/analytics. In a sense, these are the most foundational capabilities needed by insurers for success in the digital age. Two of the traditional initiatives are primarily in the strategy and planning stages: innovative products and services, and the restructuring of the workforce. Personal lines have not historically been known for product innovation, relying on tweaks to coverages and services for the same basic products for many years. Now, a new generation of opportunities is upon us with the advent of on-demand insurance, parametric insurance, episodic insurance, and coverages for emerging risks such as cyber. From a workforce perspective, the industry is on the front edge of massive retirements of insurance professionals, leading to the need to introduce more technology to support the workforce (collaboration tech, AI), increase recruiting efforts, and rethink business models.
While the traditional initiatives are vitally important and foundational, it is the new world initiatives that hold the promise for more competitive differentiation. Improving the customer experience and becoming more digital are the two initiatives that have been underway for several years at many insurers, and they continue to pick up steam. Newer initiatives such as investing in InsurTech and emerging tech are earlier in the strategy and planning stages, but important activity is underway there nonetheless. Almost half of personal lines insurers are developing strategies to deploy new business models, an indicator of how much rethinking and transforming are actually underway.
This is a significant time of change and transformation for the personal lines sector. The next five to ten years are likely to produce more than a few surprises, with new products, new competitors, new distribution options, and the impact of InsurTech and emerging tech reverberating across the industry.
This blog entry has been reprinted with permission from SMA.