August 11, 2021
Tech Pulse Quickens for Commercial Lines
It was almost as if someone flipped a switch on Jan. 1, and commercial lines insurance companies began accelerating technology plans.
The past 18 months have been interesting (to say the least) for anyone involved in technology strategy, planning or implementation. Ideally, a road map with prioritized projects and defined resource allocations directs the activity, and the company stays relatively true to its path. Unfortunately, the pandemic, with all its implications, has wreaked havoc on tech plans. Project priorities have often shifted, sometimes virtually overnight. Digital gaps have been exposed. Customer expectations have dramatically changed. And executives wonder what the new normal will look like.
SMA has conducted a series of market pulse polls throughout the pandemic, starting in April 2020 as the initial economic lockdowns and work-from-home mandates began to take hold. Our latest survey, conducted this May, assessed how plans are being reshaped as commercial lines insurers move forward in the second half of 2021 and formulate plans for early 2022. Whether we are moving toward a post-pandemic era in the U.S. is debatable, but what seems clear from the plans of commercial lines insurers is that tech-related plans are moving ahead full steam.
So, what does the big picture look like?
The commercial lines insurance industry has gone through three distinct phases over the last year and a half. In the early days of the pandemic, there was a tactical response to the lockdowns that affected employees, customers and partners alike. New virtual, digital capabilities became a priority to enable remote work and remote customer interactions. Then, as 2020 proceeded, phase two began. As it became evident that the pandemic would continue for some time, there was some deceleration of some activities or a pause in projects, and some of the more innovative initiatives were tabled until 2021. The third phase began in 2021 with an explosion of activity. It was almost as if someone flipped a switch on Jan. 1. Commercial lines companies began accelerating plans, launching a frenzy of tech-based strategy and implementation activity in the first half of the year.
SMA’s most recently completed survey shows that hardly any companies plan to retrench or pause project activity in the second half. There is a significant amount of rethinking for road maps and project reprioritizations. One exception to the reshuffling of priorities is in core systems. Any companies that had policy, billing or claims systems modernization projects in flight have continued to push forward. These projects are so foundational and have so much urgency and momentum that it would be unwise to pause or reprioritize them.
See also: The Digital Journey in Commercial Lines
So, the stage is set to be very active for the rest of the year as companies double down on technology initiatives. Although 2022 plans have not come into sharp focus just yet, strategy and budget planning are underway at many companies, and the early glimpse indicates that this accelerated digital transformation will not be just a one-year phenomenon. It may just represent the new normal. I personally can’t wait until 2022 to see what is in store for the industry!
For more information on commercial lines plans for technology, see our recent research report, “Commercial Lines Digital Plans and the Post-Pandemic World: SMA Market Pulse Insights.” The report also includes a view for insurers’ expectations for the workforce come January 2022.