Small commercial insurers challenged to digitalize

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Small commercial insurance carriers are challenged to incorporate new digital technologies into their business, according to a new report from LexisNexis.

After surveying 400 insurance professionals in workers’ compensation, commercial auto, commercial property and business owners policy lines, LexisNexis notes that insurers are aware that they have to transition to a more digital experience to meet customers’ changing needs, but also have to maintain legacy systems and processes to service current policies.

Mathew Stordy, Senior Director of Commercial insurance at LexisNexis and the report author explains, "It can be overwhelming for commercial insurers to know where to begin in order to keep up and gain a competitive edge. But the good news is that the carriers who identify the gaps and act now can make meaningful progress towards attaining 2019 and future goals."

Stordy identified five places insurers can begin in order to meet new customer expectations:

1. Expand Automation Capabilities: Automation lags behind desired levels, and levels haven't improved over the past couple of years. In fact, 89 percent of insurance professionals responding to the survey reported the need to manually re-evaluate insurance applications and, as a result, the degree of manual work required in commercial underwriting continues to be the leading pain point. If carriers expand their automation capabilities to include advanced use of predictive modeling and automated quoting through prefilled data, they can get closer to their efficiency goals by reducing errors and unnecessary rework on policies, improving turnaround times, and advancing their competitive advantage.

2. Take Advantage of the Best Data Available: While insurance carrier respondents state that consumer credit (77 percent) and commercial credit (76 percent) information offer them the most valuable competitive advantage, only 40 percent of them have integrated these data sets into their standard workflow. Instead, they're relying on public records and Internet searches. If carriers standardized the usage of consumer and commercial credit data across the workflow, it could help improve their profitability.

3. Use Predictive Modeling Consistently: 81 percent of commercial carrier respondents believe predictive modeling is important to their commercial underwriting, pricing and rating, yet only a third currently use it consistently. And, according to the study, carriers believe predictive modeling can improve risk assessment and support more consistent decision-making. Carriers who leverage predictive modeling most appropriately gain the more near-term benefit of better scoring data that can help them make the best decisions for their business. Longer term, they can build on that knowledge to adopt predictive modeling as a consistent business practice.

4. Improve Customer Experience: When quotes for personal insurance can happen online within minutes, it sets the expectation for customers that commercial insurance should be the same. But commercial carriers have typically underinvested in the customer experience, so expectations are often met with disappointment. However, adding automation can help achieve faster turnaround time, which has been cited as a top priority for commercial carriers. And, for the 85 percent of survey respondents who would like to see improved accuracy of customer data, adding predictive modeling and a streamlined process to standardize how policies are written are easy ways to help improve customer satisfaction.

5. Embrace and Invest in Emerging Market Trends: There are many external factors that can impact business strategy. According to commercial insurers, telematics, Internet of things (IoT), data breaches and sharing platforms are seen to be the most likely to impact their business. Along with identifying relevant emerging trends, the study also asked commercial carriers to characterize each as a threat or opportunity. Responses reveal telematics and IoT as the two trends offering the biggest opportunities for their business. Change is inevitable and those who will be the most successful are the carriers who embrace these changes and take advantage of the opportunities that present themselves.

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