2014 Priorities Checklist: What’s on Your Radar?
Karen Furtado | April 21, 2014
As one would expect, there is a strong linkage between the most pressing P&C business solution projects and the investments currently being made in technologies and tools to support them. SMA recently looked closely at these priorities analyzing them to understand the key drivers and focus areas for P&C insurers in 2014.
In line with SMA’s observations from working with insurance companies of multiple sizes in the personal lines arena, insurers are highly focused on the customer—both the insured and the agent. As the EVP of one regional insurer recently expressed to me, “We will make it easier for our customers to do business with us. We want the choice to be a no-brainer.” In light of this focus, it is no surprise that personal lines insurers are investing heavily in portals and mobile apps.
In 2014, one out of every two personal lines insurers is replacing or enhancing mobile apps and over a third of personal lines insurers will replace or enhance agent and insured portals, with a goal of being able to personalize and manage preferences. The momentum moves well beyond submissions to the expansion of sales and service activities, including self-service capabilities.
There is a significant effort to automate underwriting and increase the percentage of straight-through-processing. Many insurers have implemented new policy and billing systems and are now moving on to claims, where the capabilities are behind for meeting service-level expectations.
There is a notable push to capitalize on internal data and expand the use of external data. This data drive is fueling investment in underwriting and policy administration systems so that business intelligence, predictive analytics, master data management (MDM)/data warehousing, and big data analytics can be leveraged effectively.
In the commercial lines segments of the business, priorities are being placed on data and analytics, and emphatically on core systems replacements or enhancements. An overwhelming 92 percent of those insurers that are writing pure commercial lines are planning to replace or enhance their policy administration systems. It is clear that the pressure is on. Modernization of core is essential—the foundational move that makes it possible to transform and innovate.
It is undeniable that a modern core system is now a must. The number of companies replacing or doing major enhancements on policy administration systems is the highest it has ever been. While policy administration is indeed a significant investment for insurers, it has become a major growth lever in commercial lines—enabling the insurers equipped with modern systems to handle program business and deliver effective, timely customer documents—capabilities that were simply not possible with their older systems.
At SMA, we are sensing that the industry is gaining clarity about the role for big data as they broaden their definition and the scope of the role data will play in their future strategies and successes. Some would even say that the ability to incorporate and exploit big data could one day be among the survival criteria.
In personal lines, big data is reported to be a key area of focus, in line with the prioritization of tools and technologies around the whole customer experience. In commercial lines, the top four technology and tool priorities all relate to data—predictive analytics, business intelligence, big data, and MDM/data warehousing.
In some ways, that is not surprising, with the explosion and availability of external data and the increasing understanding of the impact on decision processes at every level of the business. In other ways, it is surprising and encouraging to see how the industry is moving rapidly to gain advantage. The days of the tortoise playing catchup are forever gone and we all know why.
(Karen Furtado, a partner at Strategy Meets Action (SMA), is a widely recognized expert in the core systems space. She has knowledge of policy administration, rating, billing, and claims, and deep understanding of distribution and emerging technologies like social media, cloud/SaaS, and collaboration. Reach her at email@example.com.)
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