Four Top Technology Priorities for Personal Lines Carriers
Jeffrey Goldberg | June 29, 2015
Today’s personal lines marketplace is more competitive than ever due to slow growth, intense price competition, and customer acquisition costs rising.
Personal lines insurers have always been leaders in insurance technology innovation and conversations with CIOs and research in the space show that trend will continue, with technology playing an ever-larger role in insurers’ ability to attract, retain, and profitably serve clients.
In a market with competitive conditions and intense profitability pressures, personal lines carriers are focusing on growth strategies, expense reduction, and improving underwriting results. Below I have listed four technology priorities CIOs and business executives should consider to remain competitive.
A data quality initiative, which examines data warehousing, operational data stores, and appropriate data marts, is key before undertaking more advanced business analytics initiatives. Once data quality is ensured, carriers can then overlay business intelligence tools. Predictive analytics tools for carriers with sufficient data are becoming more popular. Small carriers should look at working with an organization that can provide pooled data and insights. All carriers can use models to improve underwriting insights, to more consistently apply pricing, and to improve claims activities. In addition, third party big-data sources are going to become more prevalent for personal lines insurers. Companies that take advantage of this first will have an edge in pricing and retaining business.
Policy Administration Systems
Upgrades to policy admin systems will help carriers gain operational efficiencies and flexibility in the ability to add data. Using business rules to manage workflow and predictive analytics to build pricing models can improve risk selection, risk pricing, and reduce operating expenses. Carriers should look for highly configurable solutions with product configurators, simple rules, and tools for launching new rating algorithms. They should also look for the ability of the business units to make their own modifications, though practical experience with configurable systems reveals IT often still ends up managing most changes. As long as the time and cost of such work for IT is reduced, that’s still a big value.
Extending functionality to the agents continues to rise in importance. It’s less about differentiation and more simply the price to pay to be in the game. At this point in time, most personal lines insurers have built an agent portal and are often quite proud of the results. As a next step, both agents and carriers would prefer to receive and provide information electronically and process that information with as little human touch as possible, eliminating double entry. Real-time upload, download, and data translation deliver tangible benefits including reduced costs of handling, improved data quality, and improved turnaround time.
Streamlining claims management by automating processes improves customer service by speeding up claims service, providing consistent and fair best practices to all customers, and delivering personal service. On top of these customer benefits, insurers who have implemented modern claims systems report tangible speed-to-market benefits. If a carrier hasn’t already begun to upgrade their claims administration system, now is the time to start. Carriers who are using modern systems are rapidly gaining competitive advantages by improved efficiencies in claims handling and improved data leading to better outcome management. In addition, better claims processing has become a significant part of how personal lines insurers market themselves to consumers and how consumers select an insurer.
Jeff Goldberg is vice president of research and consulting at Novarica with expertise that includes data analytics and big data, digital strategy, policy administration, reinsurance management, document automation, SaaS and cloud computing, data governance, and software engineering best practices such as agile and continuous delivery.
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