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January 2, 2020

Is Transformation Losing Steam?

Summary:

In a word, no. Interest and application in personal lines are still strong because of UI and AI. But some scenarios are good news/bad news.

Photo Courtesy of Pixabay

Technology adoption in personal lines has been going on for a long time. Because of the early advent of personal auto data standards, technology adoption has been fairly easy (always a relative term). Many insurers have staked their industry competitive advantage on data and analytics – Progressive comes to mind. Others have been early adopters of advanced payment technologies – USAA is a great example. So, is it time for transformational technology adoption to plateau or even dip in the personal lines segment?

SMA has been conducting a survey on this very topic over the past decade. As one would expect, early results showed a good deal of learning and strategizing, with cautious investment. Over time, investment ramped up, as did implementations. But what about current results? Is the hype wearing down conviction?

Without reservation, we can state that adoption is not losing steam. The recently released SMA report Transformational Technologies in P&C Lines: Insurer Progress, Plans and Projections reveals that transformative technology interest and application is strong. In particular:

  • New user interaction (UI) – Chatbot technology and text messaging technology are keeping this area high on everyone’s list.
  • Artificial intelligence (AI) – Given all the iterations of AI in the marketplace, the possibilities for adoption are almost limitless, and insurers are definitely keeping initiatives in motion.

Now, I don’t think that anyone reading this blog is stunned that UI and AI are still rolling in personal lines. They both will be for a long time due to the opportunities that keep arising and the strong bottom-line impact. However, the survey does show some noteworthy things – and not for their “rolling along” status.

  • There is a good news/bad news scenario developing in the UI/AI results. Many insurers are putting all their investment eggs into these two baskets and ignoring – or at best shortchanging – other transformational technologies. It is very hard not to run toward one or two areas that are delivering early value. However, insurers need to have an even view of all the transformational technologies that affect customers.
  • The SMA survey asks responders to identify the business areas that transformational technologies will affect. One of the choices is claims. Anyone who has read my recent blog Claims – Caught Between a Rock and a Hard Place – No More! will understand that I am a huge fan of claims workers. They have a super-hard job, one that is at the very heart of what insurance companies are all about. The troublesome thing is that survey results show that claims impact was sometimes fairly low in areas where it should not be.

See also: Commercial Lines Embracing Change  

In all, the personal lines transformational technology report covers 11 technologies. It also provides a view of the impact of these technologies on 12 business areas. The trick is keeping the technologies and business impact areas in balance in terms of strategies and investment. Not every insurer will find business value in all 11 technologies; the key to keeping inertia at bay will be making conscious and well-considered decisions.

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About the Author

Karen Pauli, principal at SMA, has comprehensive knowledge about how technology can drive improved results, innovation and transformation. She has worked with insurers and technology providers to reimagine processes and procedures to change business outcomes and support evolving business models.

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