The personal lines segment of the insurance industry is quite active today, with many initiatives and projects underway across the value chain. For many, the objective goes beyond incremental improvements to positioning the company for fundamental transformation. The many projects planned or in progress fall into three categories: Digital Enablement, Core Transformation and Data/Analytics. A newly published SMA research report, Foundational Technologies in Personal Lines Insurance, details the projects and initiatives underway in 2019 and beyond.
One of the major challenges we observe in personal lines is the struggle to balance the need to establish a modern, competitive foundation with incorporating new technologies to position for the future. Most insurers have very long lists of projects for things like enhancing portals; replacing or upgrading policy, billing or claim systems; and modernizing business intelligence solutions. These are the types of projects that SMA terms “foundational,” precisely because modern solutions in these areas are table stakes for success today. Incorporating innovative solutions from insurtechs and incumbent tech providers that leverage machine learning, the IoT, wearables, virtual payment technologies and more are highly desirable but difficult to build into operational plans. These advanced types of solutions are what SMA calls “transformational technologies” and will be the subject of a SMA research study and report.
See also: Emerging Technology in Personal Lines
All the excitement and visibility tend to center on the transformational technologies, and there’s no question that there is tremendous potential for innovation that can create competitive advantage. Yet the No. 1 task for insurers today regarding technology is to ensure that the foundational technologies are in place to provide the levels of efficiency and effectiveness needed to compete while establishing a flexible base to build on. This is not to imply that insurers should wait to engage in any activity related to transformational technologies. On the contrary, it is imperative that insurers monitor, learn and experiment with new technologies that are most relevant for their business. Thus, the challenges of finding the right balance!
One other aspect of technology strategy and plans should be explored: the need to implement foundational technology solutions that already have some embedded transformational tech. Policy systems can leverage chatbots and AI. Billing solutions can begin to accommodate more advanced payment methods. Claim systems should already be leveraging solutions that use machine learning for fraud. Many other examples could be cited, as well.
Over time, the various transformational technologies will become foundational as many in the industry begin to incorporate them into their organizations. One by one, the advanced technologies will become table stakes, only to be replaced by a new set of transformational technologies, or at least by new, more sophisticated levels of the existing technologies.
See also: Insurtech and Personal Lines
There are a wide variety of strategic choices that senior leadership teams must make today. Allocating scarce resources and budget dollars is as difficult as it ever has been, if not more so. However, the successful personal lines insurers in the digital age will be those that find the right blend of technologies of all manner to create flexible, responsive organizations.
For more information, see the SMA research report, Foundational Technologies in Personal Lines: Investment, Adoption, and Business Areas.