P&C insurance tech budgets stay on track despite coronavirus
Editor's note: This is a companion piece to Episode 6 of the Dig In Podcast, which can be found here.
P&C insurers are staying the course when it comes to their original digital and technology plans and investments for 2020. Many insurers report no changes to their plans, with some reshaping and a few accelerating, but very few pausing or retrenching. These are the big themes in SMA’s new research report, P&C Tech Plans in the COVID-19 Era: SMA Market Pulse Insights. 2021 plans may paint an entirely different picture, but for now, P&C insurers are moving full steam ahead.
As might be expected, the plans vary significantly by line of business. Commercial lines insurers are much more cautious than their personal lines counterparts, chiefly due to the larger negative impact of the pandemic. Still, our SMA market pulse survey of insurance executives confirmed what we have been hearing from our clients:
- 95% of personal lines insurers are moving forward with their overall technology plans and investments, with only 5% retrenching.
- 75% of commercial lines insurers are moving forward with their overall technology plans and investments, with 25% retrenching or pausing.
Our survey also showed that many of the insurers that are moving forward are reshaping and reprioritizing projects while keeping investment levels steady and striving to maintain momentum. Digital payments appear to be one of the hottest areas, as insurers have been obligated to sending employees into physical offices to print and mail paper checks. Core systems also continue to move forward, although interestingly nuanced by line of business and differences between policy, billing, and claims plans.
Digital transformation plans are quite different for personal and commercial lines insurers. On the personal lines side there, is a trend toward accelerating plans, while commercial lines insurer plans are mixed. Only about one-third of commercial lines companies are continuing with digital transformation plans unchanged, while another third pause or retrench, and the final third reshape or accelerate.
Overall, the response to the pandemic from P&C insurers has been remarkable as companies continue to support their distribution partners and policyholders. Plans are likely to morph even more as the pandemic continues. SMA intends to conduct the market pulse research on a regular basis throughout the remainder of 2020 and report on changes to insurer plans along the way.
For more details on how insurer plans are changing, read the new SMA Research report, P&C Tech Plans in the COVID-19 Era: SMA Market Pulse Insights. The report covers personal and commercial lines insurer plans for overall tech spending; digital transformation plans and investments; and plans for policy, billing, claims, and payments initiatives.