Technology Providing Key Advantages in Personal Lines

Homeowners and personal auto insurers operate in highly competitive markets. The market leaders are experiencing strong growth, while many regional carriers struggle to keep their personal lines book of business profitable. The personal lines market favors large carriers and niche marketers. Large carriers can leverage economies of scale that provide an edge when collecting data and investing in emerging technology.

For personal lines carriers, technology is key to creating an advantage in sales, risk management, customer experience, and cost containment. Carriers can future proof their business strategies by enhancing specific technological capabilities, including:

• Developing highly digitized processes. Both auto and homeowners carriers are looking for opportunities to offer more self-service capabilities to their agents and policyholders. Many digital investments are looking to provide customers with more transparency. For instance, auto carriers could offer an integrated scheduling service for rental cars and towing companies; homeowners carriers could connect policyholders with a marketplace of approved local vendors.
• Strengthening analytic capabilities. Many carriers are likely to augment their consumption of third-party data to strengthen marketing campaigns, increase underwriting discipline, and improve fraud detection. This may include the consumption of pre-scored data in the short-term. Carriers should strive to benchmark their analytic capabilities against online retailers like Amazon.
• Refining their distribution strategy. Carriers may elect to partner with other carriers, associations, or industry partners to access new pools of potential clients. For instance, some smaller insurers may choose to segment their business strategy to focus solely on product manufacturing and partner with a national carrier for distribution.

Organizations can learn to innovate and adapt iteratively to keep pace with both short- and long-term trends that will impact the marketplace. Carriers should wisely invest in technology, selecting carefully from the variety of emerging technologies available. More information is available in Novarica’s recent brief, Personal Lines: Near-Term and Long-Term Technology Trends.