Status quo ante COVID? The topics insurers discussed at last week’s Novarica Special Interest Group meeting for commercial lines were mostly the topics that were relevant before the pandemic: Improved digital experiences in agent and customer portals, expanded use of straight-through processing, implementing flexible core systems, and strategies for going direct. Most of those present had tweaked investment plans only slightly, if at all, due to COVID-19. However, one insurer did note a request from management to find savings in this year’s allocated budget, perhaps foreshadowing things to come.
Revised Insurer IT Budgets
Starting off the meeting, Eric Weisburg remarked that, given that we’re in a hardening market with reduced claims volumes, it was interesting that insurer investment appetites and plans have remained largely unchanged. I noted one potential reason for that: Renewal rates are up in many cases. Deb Zawisza also underscored that IT talent is hard to acquire, so insurers are wise to keep staff on that they will need later.
One insurer concurred with that assessment: “We’re doing a core system implementation for policy, billing, and claims. We haven’t slowed down at all. It’s foundational for achieving all the other things we need, like digital capabilities and speed to market.” As a side note, this insurer mentioned that collaboration has improved with everyone working from home rather than working in a hybrid situation with office workers huddled around a tinny speaker in a conference room.
Not all the news was good, however. One insurer reported, “Management has asked us to try to find savings among the already-allocated budget for this year. We’re looking at reducing infrastructure spend, for example.”
Agent Portals and Low-/No-Code Tools
The conversation then moved onto agent portals and topics like real-time commission payments and low-/no-code development tools. I noted that the portals many policy administration system vendors offer today can make for easy-to-implement replacements to legacy portals.
For insurers wishing for a bit more control over the agent/customer experience, there is also a plethora of low- and no-code solutions for building portals. I advised that the key to finding a good low-/no-code solution is to look at vendor toolkits and sticks to ensure they can cover the functionality you need.
Straight-Through Processing and Direct-to-Consumer Sales
Deb Zawisza mentioned that straight-through processing benefits not just the direct-to-consumer (D2C) channel, but also the agent channel. Agents appreciate STP because it reduces back-and-forth in the high-volume, low-margin end of the commercial lines business.
Within the D2C channel, one insurer mentioned a new pilot for an on-demand product for snowplow coverage. They are hoping to go live with it in six to eight New England states before the snow season. They also mentioned that they’re going direct for their collectibles business.
One insurer asked, “How can you combine the product simplicity needed for the D2C market with precise targeting for what the segment wants? Sometimes simplicity means fewer options (less niche).” Deb noted that it requires designing a product so it is consumable by a prospect that has little insurance knowledge. The product features for an offering that is tailored to certain classes of business are not necessarily complex. Instead, it’s a product that is highly tailored in terms of presentation to the consumer and/or how risk is evaluated and processed.
Nevertheless, the simpler answer may be that D2C isn’t for every product. I explained that many carriers limit what classes of business they’ll write when they go direct. A more complex business may go direct later, or perhaps never.
Text Ingestion Solutions
I asked the attendees if anyone had experience with unstructured text ingestion solutions. One insurer related that they had just recently gone into production with a solution for all three types of documents: structured, semi-structured, and unstructured. The implementation includes ACORD 125s, 140s, SOVs, loss runs, and wind mitigation forms.
The Future
Insurer investment plans may not have changed a lot in recent months, but the same cannot be said for insurance itself. The industry is changing, becoming faster, more direct, and more digital. The attendees at the Special Interest Group meeting understood this and were busily building the foundations for that future.
Our next virtual commercial lines Special Interest Group Meeting for Novarica clients and Council members is scheduled for October 29th. You can register now at https://attendee.gotowebinar.com/register/6031428614839976973.
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