Technology poised to transform U.S. commercial lines insurance: Novarica

Technology is set to play an even larger – even transformative – role for commercial lines insurers in the United States to attract, retain and profitably serve clients, notes a new report issued last week by Novarica.

Pointing out that commercial insurance is often characterized by complex coverages, heterogeneous exposures and risks, and individually negotiated and priced contracts, Business & Technology Trends: Commercial Lines suggests technology will play a bigger part as prices firm up and new insurers enter the hyper-competitive commercial lines marketplace.

Part of a series on key business and technology trends in specific line of business segments in the U.S. insurance industry, the report is based on the expertise of Novarica staff, conversations with members of the Novarica Insurance Technology Research Council, and a review of secondary published sources.

The report cites drones, the Internet of Things (IoT), robots and autonomous vehicles as examples of technology that can play a transformative role in commercial lines insurance.

“Drones, the Internet of Things and robots promise to reduce carriers’ need for on-site adjusters and investigators,” notes a statement from Novarica, which provides technology strategy research, advisory services and consulting to property/casualty and life/annuity insurers. Autonomous vehicles and telematics, for their parts, “may greatly lower claims frequency (though severity will be higher, due to expensive complex embedded systems),” the statement adds.

“Commercial lines prices increases are slowing, and commercial carriers are focusing on growth strategies, improving underwriting results and improving ease of doing business for independent agents,” notes the report summary.

Agent portals continue to be important for guiding producers to carriers’ risk appetite and for ease of doing business generally, the summary points out. “Agent portals continue to be viewed as key elements of acquiring and retaining customers, and direct sales capabilities will be increasingly important for lower-margin products,” it adds.

“Insurers are investing in claims administration systems to improve operational effectiveness and the quality of the claims service, which is a key interaction with a policyholder,” notes the summary.

In addition, commercial lines insurers “are expanding their business intelligence capabilities to operationalize predictive analytics. It is increasingly common for insurers to use third-party data and multidimensional data in their analyses.”

Other report findings include the following:

• top technology initiatives for commercial lines insurers include agent portal, business intelligence and core claims and policy administration implementations;

• business intelligence and analytics are viewed as key competitive capabilities, and core systems investments continue to be critical in improving time to market and product flexibility; and

• mobile devices are making inroads in both commercial lines (the current focus of which is loss control) and personal lines.