Specialty lines in the United States continue to be hypercompetitive, with technology playing an ever larger role in insurers’ ability to attract, retain and serve clients and brokers (agents) profitably, according to a new report from Novarica.
The Business and Technology Trends: Specialty Lines report, published on Wednesday, provides and overview of specialty carriers’ business and technology issues, data about the marketplace and 57 examples of recent technology investments by specialty insurers.
According to the report, specialty carriers are trying to “hold the line” in a low-growth market, with a focus on targeted (e.g. profitable) growth, expense reduction across the enterprise and operational effectiveness leading to increased speed to market for new products.
Among the key findings:
Carriers are pursuing long-term data strategies, starting with data quality initiatives and focusing on data warehouses, operational data stores and appropriate data marts. Carriers are prioritizing reporting tools to allow the business to run ad hoc reports and obtain insights;
Improved underwriting and product development flexibility are key considerations. Carriers are continuing to upgrade to highly configurable policy administration systems to improve underwriting and enable product development flexibility to speed entry to profitable niches;
Billing efforts focus on handling both retail and wholesaler billing needs. Account billing is becoming a higher priority as part of a shift to a more customer-centric approach;
Specialty carriers are extending functionality to agents and policyholders; and
New technologies such as the Internet of Things are already impacting specialty carriers. [click image below to enlarge]
The report defines specialty insurance as covering surplus lines, program business and business written through wholesalers, as well as a large number of other types of business. Examples may include risks with unique underwriting characteristics, such as transportation or aviation risks; unique risks, such as inland marine or professional liability; risks where the policyholder needs an unusual amount of capacity (such as earthquake or coastal property); and businesses that use a distribution channel, such as program business or wholesale business.