Are personal lines insurers accelerating transformational tech plans?
The COVID-19 pandemic was a catalyst for technological change across the insurance industry, especially within personal lines. Customers demanded virtual and digital interactions, so insurers responded by accelerating the development and investments in transformational technologies. Although it may not be accurate to classify our current era as post-pandemic, insurers have adjusted their plans to match the needs of society today.
In SMA’s newest report, “Transformational Technologies in P&C Personal Lines: Insurers’ Progress in 2022 and Future Predictions,” annual research findings are revealed that track insurers’ plans and progress in transformational technologies. Thirteen transformational technologies have been identified that are revolutionizing personal lines and are explored in the report, which offers insights into insurers’ progression with each based on impact and activity.
One area that has progressed by leaps and bounds is new user interaction (UI) technologies. These technologies, which include messaging and collaboration platforms, business texting, chatbots, real-time video chats, personalized interactive video, and voice, have the most impact and activity in personal lines today. About eight in ten insurers in the segment have active plans in the category, while a quarter already has new UI tech in production. This is not surprising, as insurers rushed to improve digital interaction capabilities during the pandemic. Furthermore, personal lines executives see the potential for new UI tech to transform core business areas, primarily policy servicing and claims. This is consistent with the ongoing emphasis on improving the customer experience and the evolving demands of customers.
Machine learning (ML) is also a critical area for insurers to track, especially because the technology working with other AI and becoming embedded in many vendor solutions. Nearly all personal lines insurers see significant promise for ML in underwriting, and 61% see transformation potential in claims. However, there is a rise in the percentage of insurers interested in ML but need more funding. SMA’s observation is that this is primarily among Tier 3 and 4 insurers, particularly those with less than $500M in premiums.
As we move through 2023, we will see some effects of the pandemic continue, such as workforce dynamics and evolving risk exposures, in addition to newer challenges, including the uncertain global economy and political volatility. Carriers must carefully consider the strategic use of transformational technologies while weighing the priorities for investment amid a changing business environment.
For more information on personal lines insurers’ plans for transformational technologies, see SMA’s recently published research report: “Transformational Technologies in P&C Personal Lines: Insurers’ Progress in 2022 and Future Predictions.”
This blog entry has been reposted with permission from SMA.
