Long-Overdue Change in Commercial Lines

Commercial insurers need to leap forward with a big vision for the future of underwriting, then reverse-engineer a holistic strategy to deliver on it.


When Deb Smallwood and I wrote A Recipe for Commercial Lines Underwriting Transformation, we articulated the need to break free of the traditional paradigm of siloed and incremental evolution being viewed on a quarter-by-quarter and year-by-year basis. We challenged commercial insurers to leap forward with a big vision for the future and then reverse-engineer a holistic strategy to deliver the vision that leads with business, people and culture and is enabled by technology. This is the path to meaningful transformation that will ensure sustainable economic success AND create attractive environments that support good talent and generate further innovation. Our industry survey confirmed that significant change is on the horizon and that we’re not taking all the right steps today to prepare for, let alone capitalize on, that change. Meaningful differences emerged between the way small commercial units and medium-sized to large commercial units are positioned today, and what their paths forward should look like. Download the eBooks here for additional detail.

Perhaps not unexpectedly, given the prioritization and investment in personal lines and small commercial, we find that small commercial executives expect significant change to affect their organizations more quickly than do leaders in the medium-sized to large market space. Small commercial expects more dramatic change over five years, and our data shows that they are further along in envisioning and executing toward a future state, though there are still notable gaps to which attention must be paid.

Underwriting in the middle and large market spaces has historically been more complex and handled in a bespoke and high-touch way. It is here that we see the infinite layering of tactical tools as a stopgap, and prioritization for technology investments are behind their small-market counterparts. It makes sense that they see a 10-year runway for significant change borne out in the data. What gives pause for concern, however, is the lack of clarity on when and where to begin. We see this and other elements as potential roadblocks and warn that a good blueprint is necessary to manage through the construction. This space is ripe for development, and we are focusing on helping insurers create and activate those blueprints.    

There are elements to be learned from the small-commercial journey. Data shows that they are leading with an outside-in, customer-centric view that drives meaningful and urgent change internally. While there are gaps to be attended, that action orientation with the end customer in mind is to be favored over the internal focus on improving speed, expense and risk-taking that is slowing change in the middle market and complex space.

A bright future is unfolding for commercial insurance underwriting, and the possibilities are both exciting and long overdue. Given the risks identified in our research and documented in these eBooks, it is critical to think big and enable real transformation – the market, your teams and leaders and your customers all need and expect it. It is a differentiated starting place between small commercial and the middle market, but, in both cases, we believe the best way to get there is to flip the lens and let the business and people lead the effort, updating processes, with all of it enabled by technology. Creating a culture of change readiness and innovation today pays dividends immediately and is the best way to accelerate this journey toward the future.

See also: The Future of Underwriting

In addition to the small commercial eBook and mid-to-large-market eBook, SMA and Boundless Consulting have written a research paper on this topic and designed a framework to guide organizations on this journey. Click on the links for more information.

Megan Bock Zarnoch

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Megan Bock Zarnoch

Megan Bock Zarnoch is an insurance executive and culture creator. She helps companies grow market share, reduce expense and attract and retain top talent.


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