The Digital Journey: Where Are Commercial Insurers in the Present Day

Small Business Canada

The coronavirus pandemic caused a significant upheaval in how we work and live, and the insurance sector was no exception. Almost instantly, insurers were obliged to develop new methods of working and virtualizing their functioning, which was most successfully navigated.  

Businesses across sectors, particularly insurance, have been accelerating digital transformation efforts in order to adapt to remote access for staff and customers for over two years. Many self-service capabilities, like digital payments, virtual inspections, and automated workflows, were prioritized by insurers, while investments in AI (artificial intelligence), IoT (Internet of Things), new user interaction technology, and several other cutting-edge technologies were also prioritized. 

Nevertheless, as the global pandemic’s impacts play out, market action shows that commercial lines insurers are again prioritizing their technology-powered initiatives, with some programs moving forward while others have halted. They are progressing on their digital journeys, propelled by client expectations and the global acceleration of digital capabilities.

Earlier in the industry’s digital evolution, personal lines received all of the emphasis. Commercial lines, particularly those covering more complicated risks, were left behind by the surge of InsurTech, mobile, and digital activity that swept the rest of the business. But that isn’t the case anymore.

The enormous potential of digitizing the customer experience and digitizing assets is now widely acknowledged, and change is well underway. However, owing to the epidemic, there have been some substantial modifications to digital project objectives during the last year. The shift to a lockdown/work-from-home scenario, which happened almost quickly, showed critical weaknesses in insurers’ capacities.

Commercial lines businesses reprioritized projects in order to serve policyholders, agents, and employees wanting remote, digital capabilities beyond 2020 and 2021. These modified goals have been carried over into 2022, albeit initiatives for insurers at varying maturity for those focusing on small commercial and large commercial (mid-market).

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The Current Status of Digital Transformation

Digital Transformation in Commercial Lines: Project Priorities for 2021, an SMA research paper published in the year 2021, provided specific strategies for small and mid/large commercial lines insurers relating to a number of digital initiatives. There are several parallels between the lines. For instance, contemporary core systems and ongoing asset digitization were seen as the cornerstone for digital transformation.

Although these initiatives may not have caused considerable transformation on their own, they were critical facilitators for a wide range of more revolutionary digital ventures. More information must be available in digital formats, and the systems of record that manage critical transaction flows and data must be designed on current architectures that give the flexibility and agility required in the digital era.

In the present day, thirteen “transformational” technologies are collaborating with fundamental technologies including portals, core systems, CRM systems, and several others to usher the insurance sector of Canada into the state-of-the-art digital-connected future. 

Transformational Technologies in P&C Commercial Lines: Insurer Progress, Plans, and Predictions, a new SMA research paper, investigates these technologies and how they will affect commercial lines insurers today as well as in the coming times.

Commercial lines insurers are tackling AI-related as well as non-AI-related revolutionary technologies with varying degrees of investment and uptake. SMA has tracked these technologies throughout time, categorizing them into:

  • Short-term
  • Mid-term
  • Long-term

Computer vision, machine learning (ML), robotic process automation (RPA), Internet of Things (IoT), virtual payments, and user interaction technology will keep on generating significant interest and have a vital impact on commercial lines in the year 2022 and beyond. Nevertheless, some insurers have stated that they are slowing down their plans for particular short-term horizon technologies. 

51 percent of the commercial insurers last year claimed that they were amid the new ML solution installations, while projections through 2022 show just 45 percent deploying, with Tier 3 and 4 firms leading the way. The circumstances surrounding the coronavirus health crisis are mostly to blame for the slowdown in developing ML potentialities for smaller insurers.

Looking ahead, Blockchain, 5G/Edge computing, autonomous vehicles, and AR/VR (Augmented Reality/Virtual Reality) are projected to have a transformative influence on the sector. More commercial line executives realize their capability in specific business categories than a year ago. For instance, as key wireless networks broaden coverage and more devices support the technologies, the capability for 5G/edge computing grows.

According to a 2021 SMA study, 24 percent of commercial lines insurers are watching and formulating first strategies circling 5G/Edge computing, up from 18 percent in the year 2020. 5G has the potential to change several sectors of commercial insurance, including IoT, driverless cars, and several other new UI technologies. As a result, as the technology gets more generally accepted, it will most likely turn out to be a short-term horizon technology for insurers to plan with.

Despite the impact of the pandemic, the projections for 2022 indicate another year of progress in the digital journeys of commercial lines insurers. As the decade unfolds, insurers will go beyond the initial stages of digitizing assets and allowing digital interactions to position themselves for full digital transformation, which will result in more creative products, new alliances, and new business models. Those that effectively alter their businesses will gain a competitive advantage.

The Key Takeaway

As digital and virtual interactions turn out to be the norm, the industry’s transformative technologies will become even more vital. In today’s ever-changing technological ecosystem, irrespective of where commercial insurers are currently in their digital transformation path, their plans must be constantly reviewed and altered.

As a data-driven sector, insurers should see digital transformation as a vital step in unlocking data value, both from the large amount of primarily static data that insurers currently have and from context-driven external data flowing in via IoT, telematics, and other similar sources. Only insurers who grasp digital transformation will be able to develop new data-driven insurance products, which will increasingly drive the foundation of competition.

Such goods will enable the individualization of what end customers have come to anticipate, especially in the post-COVID-19 world, when digital contact is the new standard. Those financial services organizations that can use data to create new risk experiences will be well-positioned not merely to gain insurance market share, but also to grow into totally new business models and markets.

Lastly, in the quest for a competitive edge, insurance firms must react in real-time, that is, right now to traverse this new ecosystem. In order to survive and thrive, insurance companies must take action. There is no time for nostalgia or complacency in this new society. There is no turning back to what used to be considered normal. The risks and prospects are much too big, and the stakes are far too high. Executives must prepare their companies for continuing uncertainty, unavoidable upheaval, and unending change.

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