The term “specialty insurance” encapsulates a swath of niche and non-standard markets with unique characteristics (and unique risks). This market requires operational and technological flexibility to meet the needs of insurers and insureds, as well as to compensate for today’s uncertain regulatory landscape, variable rates, and a host of emerging risks (e.g., cyber-liability, on-demand insurance in the sharing economy).
Specialty lines carriers are increasing their focus on distribution—a critical area, as these insurers typically work with above-average number agents to account for their narrower focus. As such, specialty carriers view ease of doing business as an essential capability and are deploying digital experience platforms and extending self-service capabilities and straight-through processing functionality.
Another key area of focus for distribution is new business submission. Specialty carriers are beginning to investigate what role automation—aided by digital broker platforms and API catalogs—can play in supporting new business application document ingestion. Carriers are also incorporating analytics, data prefill, and workflow applications to streamline the new submission process.
Analytics capabilities are also playing a role in product development, another high-priority area for specialty carriers. Carriers are using these technologies to identify emerging risks, understand loss profiles, and recognize product opportunities via analytics capabilities. Carriers are also replacing core systems to address core product development capabilities. The focus of these projects is largely avoiding large up-front costs for new products and enabling speed to market. Particular methods of implementation and types of product development approaches vary from insurer to insurer.
Underwriting capabilities are also receiving more attention and investment from specialty carriers. Many specialty carriers view workflow and BPM as important components of their application portfolios, as their processes tend to be more complex and they have been less aggressive in modernizing core systems than other carriers. AI/ML, predictive modeling, and the integration of new data sources are all capabilities of interest for underwriting. Carriers are also leveraging workflow and business process management tool deployments to support UW capabilities that require integrating back-end systems and business logic.
Specialty carriers are upgrading their policy administration systems with the goal of configurability. These systems allow business users to define data elements with configuration, simple rules, and tools for launching new rating algorithms. Highly configurable policy admin systems can also accelerate carrier ability to enter new and profitable niches. Flexibility is also the endgame for specialty insurer efforts in billing. Billing replacement projects per se are not top of mind for carriers. However, carrier efforts do include building out support for complex accounts (e.g., multiple bill plans, split bills). Specialty insurers are also seeing account billing as a higher priority as part of a shift toward greater customer-centricity.
See Novarica’s recent report, Business and Technology Trends: Specialty Lines, for more on specialty carriers’ business and technology issues, marketplace data, and examples of recent technology investments.
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