Other parts of this series:
Five investment ideas to fuel next year’s results
Right now, many insurance businesses are planning their investments for 2021. This annual process is unusually difficult this year, and not just because of the pandemic. This post continues our series on no-regret choices different insurance businesses can include in their plans for next year. Today we’ll look at commercial and specialty carriers.
Why is it so difficult to make confident predictions about 2021 investments for commercial and specialty carriers right now?
- Customers have been disproportionaly impacted by the pandemic. This impact is also ongoing, which means it is unresolved.
- As businesses do recover, digital aspects of shopping, delivery, and service will be more important than in the pre-COVID world.
- While agent sales and service will remain predominant, providing digital capabilities to market, drive sales, and provide service will become a necessity.
To get ahead of these trends next year, commercial and specialty carriers should be considering investments in one of five key areas:
- Reengineer the core underwriting process
With expected pressure on premiums from lost business, carriers will need to improve both expense ratios and loss ratios with core operational changes. Fortunately, carriers can choose from a host of proven cutting-edge tools to improve the efficiency and the effectiveness of underwriting. These include reengineering with a focus on improving data quality, underwriting accuracy, and automation for both new business and renewal processes.
- Regain trust with improved experiences
The pandemic response eroded trust in many industries—insurance among them, since many small business owners didn’t realize they were not covered for a pandemic. To be successful post-pandemic, carriers will need to create transparent digital experiences that allow customers to find them, explore how products will meet their needs, and provide onboarding, claims, and service experiences that build trust. Agents can still have a major role to play in serving customers, but carriers will need complimentary digital strategies to connect with their customers.
- Transform core platforms
While many carriers have migrated to modern policy administration systems, others still lag. With the need to support sales and service across multiple channels in the future, if you haven’t replaced your platform yet, 2021 is the year to start. New platforms can reduce the overall cost of ownership, provide the backbone for new products, and support multiple distribution and service channels. They need to be chosen carefully to make sure the future business is fully planning for the future and that you aren’t just porting a process from 1990 onto a new platform.
- Unleash intelligent underwriting
With policy costs under $10,000 (and often under $1,500) and a successful sales ratio of 10 percent, it’s critical for new business and renewal underwriting to be as automated as possible. But automation only works if the underwriting practices are set up to ensure the right data is used from the submission to match coverage to consumer need. Intelligent tools such as advanced third-party data tools, analytical models, and intelligent robotics can dramatically boost automation while maintaining or improving underwriting quality. The key here is that carriers need to be willing to move beyond simple rules processing and data sets with 100-percent fill and 100-percent accuracy.
- Embrace innovative solutions
Today, medium- and large-size commercial companies’ data and services are no longer provided just within their walls. They rely on trusted partners to provide key services such as payroll, accounting, and technology and sales platforms. These partners have the data and insights that can allow you to create innovative solutions for their customers.
For example, consider a payroll or benefits provider. They have the exact employee counts of the company. If you had a solution that could benefit all parties, you could offer an innovative workers’ compensation policy that no longer required audit. These are the types of solutions of the future where insurance is integrated with larger services. So, in 2021, take the time to investigate, explore, and stand up at least one innovative solution.
It’s never too early to plan for next year—especially after so much disruption. Hopefully these ideas give you a start on getting your business ahead in 2021. And if you need help shaping, refining or executing any of these, I would love to hear from you.