Insurance carriers are beginning to take advantage of the potential that digital transformation and advanced data will bring to the P/C insurance industry. Despite personal insurance lines having been the main focus initially, specialty insurance offers insurers a lot of growth opportunities where they could benefit most from emerging technologies. Flexible technology platforms, Internet of Things (IoT), blockchain and the increased availability of niche third-party data sources are significantly streamlining specialty lines management and improving customer experience.
Specialty insurers are increasingly targeting more middle-market and small businesses to satisfy their growth objectives, but most specialty products and underwriting exposures are very complex and more difficult for insurers to confidently expand into these markets. They will need to lean heavily on digital transformation to streamline and simplify interactions for both distribution and insured customers to deliver a consistent customer experience.
Better data capture and processing can partially replace designated specialists
Specialty lines, from marine cargo to professional liability, have more roadblocks to seamless business operations than standard commercial and personal lines. The scarcity of relevant experience and talent is often at the forefront of these challenges. Consider that underwriters and actuaries must be aligned on how to assess risk, and insurers must deliver the right information between team members as well as call centers to accurately convey coverage packages to policyholders. Some specialty products are incredibly niche and require a specialist to assess each business before the policy is written, which is expensive, time consuming, and impossible to scale without the use of technology.
Insurers can reduce the need for specialist field visits and standardize the onboarding process by integrating third-party data into an insurers’ technology platform to pre-fill and ensure risk information is complete and verified. The right data can help establish rating algorithms and score specialty products akin to how workers’ comp insurers use hazard codes to support risk assessment. Take the example of professional liability for lawyers. Traditionally, plenty of research is required on law firms across the country to assess each new policy, including case records, win rates, judges, and more. Instead, insurers can aggregate this data to populate their systems. This automates the process and allows employees to make uniform decisions at a much quicker pace. It’s important that insurers consider technology solutions with the most diverse sets of APIs available and built-in connections to the data sources. The combination of these elements into a digital platform helps insurers merge these building blocks into specialty-specific solutions, creating endless opportunities to streamline their processes and simplify products.
Incorporating new technologies improves business operations for specialty products
Blockchain and IoT use cases are still taking shape in most industries, but there is plenty of opportunity for both in specialty lines. Marine cargo insurers can benefit from connected devices attached to shipping containers to monitor temperature, track insured cargo, and collect data similar to how insurers leverage driver telematics in auto insurance. This information can power a predictive model to standardize and simplify risk assessment, allow insurers to offer pricing incentives for collecting data, or inform decisions during claims settlements. Combined with blockchain and smart contracts, insurers can further streamline operations and automate the sharing of consistent information throughout the insurance supply chain. Participants, such as banks, gain the ability to verify the authenticity/validity of insurance certificates in conjunction with letters of credit, or provide claims representatives aboard the ability to confirm coverage details of the insured shipment.
The technology to improve insurer operations also has a ripple effect that positively impacts customer interactions. Insurers can develop a better digital experience through policyholder and agent portals, by pulling from data sources to streamline data entry while still tailoring products to each profession. As with any line of insurance, customer experience is measured by the simplicity to purchase and bind a policy.
Specialty lines has always been an attractive market segment, particularly for insurers looking to add high-margin business to their portfolio and reach mid-market and small business customers. However, high ROI for many specialty products wasn’t attainable a few years ago due to the lack of scalability, need for manual intervention from specialists in the field, and a high degree of complexity or effort required to collect necessary data to profitably underwrite the risk. Sophisticated technology platforms and growing data consortia for many niche markets are now closing the gap between standard and specialty lines of business, helping insurers bring tailored products to market by combining the coverages of lines that were once siloed into a consistent and efficient shopping experience.