Tag Archives: personal lines

2 Areas of Focus for Distribution

Within the insurance industry, the personal lines sector has frequently been the pioneer in building and enhancing digital capabilities. With increasing demands from both policyholders and distribution partners for digital solutions, technology innovation was and remains imperative to both staying relevant and increasing market share. Simply put, insurers that do not continue to prioritize their digital capabilities risk being left behind or, even worse, becoming obsolete. Distribution partners, including retail agencies, brokers, wholesalers or MGAs, are currently focused on two key areas – user experience and ease of doing business. They are looking to partner with insurers that reduce friction points, increase efficiencies and provide self-service digital offerings to both agents and policyholders.

Furthermore, the channel strategies of personal lines carriers are continuing to evolve. A recent SMA Research report, “Channel Strategies and Plans for P&C Personal Lines: A View of Today’s Environment and What’s to Come,” highlights key channels that insurers plan to expand over the next several years, including insurtechs, agents/brokers and affinity partnerships. To examine the digital capabilities required to both support and expand these channel strategies, SMA recently surveyed carriers focused on the personal lines market. The research looked at the current state of digital capabilities offered to distribution partners, the technology and business/cultural roadblocks to digital adoption and insurers’ plans for building or enhancing new digital capabilities.

SMA’s research tracked 14 different digital sales-oriented capabilities and 18 servicing capabilities. Starting with a carrier’s satisfaction with the current state of offerings to their distribution partners and subsequently examining their future tech investment plans, this report provides an in-depth look at where the personal lines industry is today in terms of digital capabilities and where it is headed.

See also: Pandemic Reshapes Personal Lines Plans

With respect to sales, insurers reported the least satisfaction in the areas of appetite and submissions. On the servicing side, where many personal lines insurers have historically focused on enhancing digital capabilities, satisfaction was higher. But satisfaction still varied based on capability, indicating that insurers recognize the need for further enhancement. When looking at future investment areas, self-service capabilities and the user experience of both the agent and policyholder are front and center.

The flurry of new channel strategies and digital projects clearly indicates that the pace of innovation within the personal lines distribution space is not slowing. Insurers must remain close to the evolving market and to changes in the needs and expectations of distribution partners. It’s an exciting time because there are numerous opportunities for growth, the potential to truly increase efficiencies and the need to transform the user experience.

For more information on personal lines distribution expansion strategies, see our recent research report, “Distribution Technologies for Personal Lines: Carrier Progress and Plans.” SMA is also introducing a new research series with perspectives from the distributor viewpoint. A regular series of research reports will be published based on surveys and interviews of agencies, brokers, MGAs, and others in the distribution channel, including insights from ReSource Pro’s large footprint of distribution clients.

Personal Lines Channel Plans

When insurance industry observers think of the channel strategies for personal lines, the picture can appear to be fairly simple. More of the business is moving to direct distribution, whether that is through call centers or the web. Furthermore, there is a clear movement to digital, straight-through processing. Comparative raters continue to exert significant influence on submissions flow. And, finally, the rich get richer – with tier one direct carriers continuing to gain share. These have been the trends for the last few years. But a closer look reveals that the evolution of distribution in personal lines is more complicated.

New research by SMA reveals several developments that must be added into the channel evolution picture.

  1. Relationships with affinity groups are a growing distribution choice: A significant percentage of personal lines insurers plan to increase their emphasis on business with affinity groups or establish partnerships with new affinity groups or companies outside of insurance.
  2. Insurtech distribution partnerships are vital: There is already substantial partnership activity underway between carriers and insurtech digital agents or distribution platforms. The new distribution platforms are more than comparative raters, providing increased capabilities to support fully digital, straight-through processing operations. 
  3. MGAs are a growing part of the landscape: MGAs play a major role for commercial lines distribution but are not always considered to be a significant channel for personal lines. That may be changing as insurers create more new/customized products for consumers and seek access to preferred segments.

Last, but definitely not least, independent agent distribution continues to flourish. The IA market landscape is shifting dramatically through M&A and the role of platform agencies. Insurers are adjusting to the new realities of partnering with sophisticated distribution partners that have scale and advanced tech. At the same time, many insurers are deploying very focused appointment strategies. Rather than scaling back on appointing new IA partners, in many cases, the opposite is occurring. Couple that with the enhanced tech capabilities being provided to distribution partners and the increased connections with intermediary distribution platforms, and it is clear that the independent channel will still be a critical part of personal lines distribution for years to come.

See also: The Digital Journey in Personal Lines

The result of all this activity in channel strategies is a move toward more omni-channel capabilities, with carriers offering prospects, producers and policyholders a variety of ways to interact. And in five years, the channel environment is likely to be even more complicated than it is today. But it is unlikely that any one channel will dominate.

For more information on commercial lines distribution expansion strategies, see our recent research report, “Channel Strategies and Plans for P&C Personal Lines: A View of Today’s Environment and What’s to Come.”

The Digital Journey in Personal Lines

Most personal lines insurers were already pursuing digital transformation before the pandemic, but the tumultuous events of last year caused many to reprioritize digital projects and change the shape of their journeys.

Generally, the industry fared well despite the lockdowns, economic volatility and work-from-home imperative. As activity and behavior patterns shifted dramatically in many ways, the industry benefitted – so much so that large rebates were offered by many personal lines carriers. However, insurers also had to deal with the increasing severities in personal auto, an uncertain financial market and reduced demand in some areas due to layoffs and an economic downturn.

From a digital journey standpoint, it was not so much about pausing the effort to become a digital enterprise as it was about reprioritizing projects to address urgent needs revealed as a result of the pandemic.

A new SMA research report, Digital Transformation in Personal Lines: Project Priorities for 2021, identifies specific plans for carriers related to a variety of digital projects. A big theme is the focus on self-service capabilities for policyholders, especially for policy service and claims. While some insurers already had robust solutions in these areas for digital capture and workflows, most found that their capabilities needed upgrades to support remote, virtual operations.

At the same time, the evolution of core systems continued unabated. Modern core systems for policy, billing and claims are the foundation for digital transformation.

The move to simply digitize more assets and automate workflows also accelerated. Although the core, digitization and workflow projects may not, by themselves, drive transformation, they are enablers for a whole range of digital projects. More information must be in digital formats, and the systems of record that manage key transaction flows and data must be built on modern architectures that provide the flexibility and adaptability needed in the digital age.

See also: The Digital Journey in Commercial Lines

Although one would think that all the focus would be on customers, the reality is more complicated. There are certainly digital projects that focus on addressing the digital gaps related to customers, such as self-service portal projects. However, there is just as much or more activity focused on operationally driven transformation. In some ways, this is the typical response to a crisis – focus on operational efficiencies and position the company to weather difficult times. But, in other ways, this focus just reflects the opportunities to reduce complexities, decrease paper and manual handoffs and increase digital data to feed digital workflows and analytics.

SMA predicts that there will be an acceleration of the digital journey as 2021 progresses, continuing into 2022. As we move toward the post-pandemic world, there is an even greater appreciation for the power of digital transformation.

How Will Strategies Change in 2021?

Individuals with strategy and planning roles have had a busy time in 2020 adapting to the evolving realities of the pandemic and economic uncertainties. 2021 is likely to be more of the same for people in these roles. Entering into 2020, personal lines insurers were on a transformation path. Innovative and bold strategies and headline-grabbing news about new initiatives were becoming common. Every insurer recognized the need to build a strong foundation with a modern core, accelerate digital transformation and become more aggressive in areas like expanding distribution and improving the customer agent/experience. Many had moved toward parallel transformation paths – operationalizing strategies and new target operating models to optimize the business while simultaneously driving breakthrough innovation with new products, new business models and new distribution approaches. However, the events of 2020 caused many to change course.

SMA’s recent research report, 2021 Strategic Initiatives: P&C Personal Lines, provides insights into how strategies are shifting. All indications are that the transformation that began several years ago will continue in 2021. However, some significant changes are occurring in strategies as insurers consider the new realities of the business environment, risk landscape and workforce shifts. Some of the big themes for 2021 include: 

  • Cost management and optimization dominate: In uncertain times, the first reaction is often to double down on expense management and operational efficiencies. To a certain extent, these areas are always a part of the equation. But in 2021, they will play a larger role as companies position for the post-pandemic environment.
  • The leveraging of transformational technologies forges ahead: It may seem counter-intuitive that companies are going back to the basics, yet at the same time are looking to implement new technologies like machine learning, bots and computer vision. But these technologies have the potential to contribute to operational efficiencies as well as provide insights to improve profitability.
  • Foundational initiatives like core modernization and business intelligence (BI) remain vital: All signs point to a constant level of high activity as personal lines insurers advance their core and BI projects. These large, mission-critical projects become even more important as companies recognize the need to have a strong foundation.

It would be erroneous to imply that innovation and “big news” type events will not occur in 2021. Even during this pandemic year, we have seen astounding IPOs, acquisitions, new products and new partnerships. Leaders will never stop innovating and looking for advantage. This will probably be the case throughout 2021, as well. In fact, bold leaders often see times like these as an opportunity to position for the next wave of growth and get even further ahead of their competitors. However, it is just as likely that most mainstream companies in the industry will be laser-focused on cost management, business optimization and successfully completing and executing projects that are already in motion. One thing is sure: Entering into 2021, personal lines insurers will continue to closely monitor development related to COVID-19, the economy, customer behavior patterns and many other dimensions that affect risk, claims and business opportunities. It will not be surprising to see adjustments to strategic initiatives happening throughout the year.

See also: Best AI Tech for P&C Personal Lines

The Future of Blockchain Series Episode 1

Blockchain has incredible potential to impact traditional business functions and inspire new innovative opportunities

A key benefit of the technology, providing a single source of truth kept up to date in real time and accessible through permissions by all stakeholders, has huge implications for the insurance and risk management industries. This webinar begins by exploring blockchain’s promise, then dives into the technology’s use in personal lines, highlighting two production-ready use cases. The adoption of this technology could save the industry $1 billion a year.

Watch to learn:

  • Where blockchain is about to make a big impact  
  • The road map for the future of blockchain
  • The status of active use cases and their testing schedule
  • How to start preparing to reap the benefits

Don’t miss this free on demand panel discussion.


Christopher McDaniel 

The Institutes’ RiskStream Collaborative

Christopher McDaniel is President of The Institutes’ RiskStream Collaborative, an unprecedented, industry-led consortium collaborating to unlock the business potential of blockchain and other insurtech technologies across the insurance industry. 

He has 30-plus years experience in the financial services industry, including in organizational transformation, process improvement, roadmap development, project management and all facets of operations and technology. He has extensive experience in Property and Casualty, Reinsurance and Life and Annuity.

Most recently, before joining The Institutes, McDaniel was a Specialist Leader in Deloitte Consulting Insurance Practices, specializing in Strategy and Operations. Before Deloitte, he was the SVP of Operations & Technology for the Insured Retirement Institute.

Patrick G. Schmid, PhD

Vice President
The Institutes’ RiskStream Collaborative

Patrick G. Schmid, PhD, is the Vice President of The Institutes’ RiskStream Collaborative, a risk management and insurance blockchain consortium. Dr. Schmid coordinates RiskStream’s consortium of insurers, brokers and reinsurers and collaborates with industry participants and technical partners. Together, the consortium develops production-ready applications that can lower costs, improve the customer experience and drive efficiency across the insurance industry. 

Dr. Schmid formerly served as the head of The Institutes’ Enterprise Research department, where he led a team of data scientists and researchers in developing analytical solutions and market insights. Prior to working in the insurance industry, he worked as an economist for Moody’s Analytics.

He was the 2018 recipient of the International Insurance Society’s Leaders of Tomorrow award.

Paul Carroll

Insurance Thought Leadership

Paul is the co-author of The New Killer Apps: How Large Companies Can Out-Innovate Start-Ups and Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of Big Blues: The Unmaking of IBM, a major best-seller published in 1993. Paul spent 17 years at the Wall Street Journal as an editor and reporter. The paper nominated him twice for Pulitzer Prizes. In 1996, he founded Context, a thought-leadership magazine on the strategic importance of information technology that was a finalist for the National Magazine Award for General Excellence. He is a co-founder of the Devil’s Advocate Group consulting firm.

Additional Information

Blockchain has long been seen as having great promise, but somehow just over the horizon. The benefits have now become tangible and are about to start rolling out across the insurance industry. This webinar lays out the broad promise, then dives into personal lines, where blockchain will soon go into production — and where just the two use cases covered here could save the industry as much as $1 billion a year.

Who should watch:

  • Executives at P&C companies, especially in personal lines, or any executive involved in innovation
  • Technologists
  • Operations executives focused on driving down costs