To remain competitive in an evolving insurance ecosystem, carriers will have to transform into digital underwriters—an evolution that necessitates significant modifications in the underwriting function. As I note in the Accenture report, Insurance strategy: Evolving into a digital underwriter, 90 percent of carriers are either currently investing in their underwriting functions or plan to over the next three years.

But are they making the right investments? In this post, I examine two of seven new traits that carriers will need in order to compete and take a leading position in the new digital insurance ecosystem: solution-oriented products and market awareness.

Throughout the financial services industry, there is a shift in focus from offering products to satisfying customers’ expectations and needs with broader solutions. As the drivers of new products and profitable growth at most carriers, underwriters must help shape their carrier’s product agenda to be more solutions and offering based.  New digital, mobile, cloud, vendor and analytics capabilities provide a path for innovative customer offerings that go beyond traditional products.

Leaders in this space, though, are looking at more than driving customer-centric solutions that increase sales, customer retention and premium per policy. They also want to improve their insureds’ risk behavior through data-driven insurance and advanced technology. For example:

  • For their agriculture customers, Climate Corp. recommends the most profitable crops to plant, when to plant, and how to tend and harvest these crops.
  • Canal Insurance supplies truck drivers with two-way-facing cameras that both reduce claims-handling time and can alert drivers when they are nodding off.

But carriers are not relying on just internal development. In the Accenture 2015 Global Risk Management Study4, 43 percent of insurers reported a greater appetite for alliances and partnerships than they had two years previously.

Insurance strategy: Evolving into a digital underwriter
Read the report.

Nor are underwriters limiting their modifications to only certain aspects of their offerings. Instead, they also are retooling how offerings are priced, billed and sold. That approach has led to a variety of innovations, including usage-based insurance, peer-to-peer insurance models and alternative distribution models, such as social media.

As disruptive technologies, new data sources and analytics increase the speed of innovation across all industries, digital underwriters need to be aware of more than just where their competitors are. To gauge where their risks and opportunities lie, carriers also must be keenly aware of the dynamics of the industries they support.

One of many examples of industry disrupters is Uber, which has quickly taken over a portion of the taxi market. We have seen how a few nimble carriers quickly responded by offering combined personal and commercial coverage, creating a rapid growth opportunity for themselves and gaining a market advantage. This is an important lesson for carriers, which traditionally have responded conservatively to disrupters, preferring to wait for the risk to play out before offering coverage.

Next time: Technology-enabled underwriting and analytically-enabled services.

To learn more in the meantime, download this report: Evolving into a digital underwriter

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