Earlier this month at Novarica’s 11th annual Insurance Technology Research Council meeting, I had the opportunity to lead a discussion session with a group of specialty and large commercial insurers about issues and opportunities on the horizon in the industry. This meeting provided a great look at how insurers are considering digital strategy in a legacy world. Some of the topics we touched on included:
Emerging Technology
Despite the potential of many emerging technologies, carriers have been proceeding with caution in adopting them. One commonly hyped technology is Robotic Process Automation (RPA), which works well with repeatable manual tasks, but may not be the most natural fit for the highly customized policies common in specialty lines. Several insurers in the session had started experimenting with AI, leveraging general-purpose solutions like IBM Watson. However, some carriers have abandoned these pilots, often due to lack of curated data. One attendee noted that “every time you start with machine learning, it’s from scratch,” as most general-purpose AI solutions won’t be “trained” in insurance lexicon and transactions. In the short-term, insurers are finding that they may be better off seeking out more niche solutions tailor-made to the industry.
Brokers and Digital
Carriers in the room generally agreed that getting broker and MGA partners on board with insurer portals is a “work in progress.” Most brokers continue to want to do business out of their own agency management systems rather than carrier portals, and many are looking for more control over data. Upload and download capability is probably going to be more important than full integration with MGA systems in the immediate future, with a near-term emphasis on download.
Managing Legacy
While they are looking forward to a digital future, specialty insurers continue to wrestle with their legacy past. One CIO stated that “adding a new coverage is a nightmare with legacy systems.” To work around this, many insurers are looking outside of traditional legacy processes. Some insurers are focusing on automating and digitizing less complex products that lend themselves to straight-through processing. For others, it’s a matter of building out a service layer on top of aging core systems to support modern products and portals. It is important to note that email and telephone will remain key technologies to conduct business for many specialty lines for the foreseeable future. As Baby Boomers retire and Millennials take their place, newer technologies will become more important.
For more on trends and issues in specialty insurance, see our recent report on Business and Technology Trends in Specialty Insurance, and to learn more about our research and advisory work with specialty and large commercial insurers, contact us at [email protected].
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