The Digitization Journey for Small Commercial Line Insurers in the U.S.

77% of commercial line agencies say that they would send more business to insurers who quoted the fastest. This is from a 2020 Digital Connectivity Adoption Survey of 2.700 agents and insurers.

Digitization in insurance is no longer limited to personal insurance and customer-facing products. In 2021 and going into 2022, the spotlight has shifted to include commercial lines insurance.

The last year spurred the demand for mobile, flexible solutions in commercial line insurance and is probably why 90% of surveyed commercial insurers from the same survey said that they would prefer to receive agent submissions in a digital way. To increase the ease of doing business, commercial line insurers must automate distribution and servicing.

Small and mid/large commercial lines are specifically focusing on the digital transformation of core systems.

The entry of insurtech into commercial line insurance

Insurtech companies have already made several inroads into personal insurance and appear to be gaining popularity in commercial insurance as well. A study by McKinsey revealed that 39% of insurtech companies are focused on commercial line insurance and a major portion of those cater to small and medium enterprises. While insurtech can often be seen as a threat to established insurance companies, the opposite might actually be true. Insurtech companies could help commercial insurers open new touchpoints, digitize several stages of the value chain, drive innovation and capture new niche markets.

Key digitization benefits in commercial insurance

Given the scale and complexity within commercial insurance operations, most insurers are still dependent on manual, human intervention for a number of tasks. It opens them to a higher margin of error, makes it difficult to scale, and impacts their ability to act proactively. Insurtech solutions can resolve many of these challenges. These benefits are in 5 major areas and small commercial line insurers stand to gain big through digitization.

Commercial insurance remains a very competitive landscape because of the steep buyer commitment and the number of insurance players on the market. Digital ecosystems are emerging as one of the most powerful ways for buyers to discover and partner with insurance companies. These ecosystems are usually portals that display insurance policies, coverage, and premiums from a number of players on a single web page. These aggregators connect to insurers through APIs and automatically reflect updates to policy details. Modernizing core platforms allow them to be interconnected with digital ecosystems.

From a buyer’s point of view, open ecosystems negate the need to manually compare various insurance plans before opting for the most suitable one. For insurance companies, these ecosystems unlock a huge volume of customer data that can be used to detect trends, proactively identify risk and expand coverage options.

With greater digitization in insurance comes larger sources of data that will undoubtedly be a huge asset to underwriters. Manual processing is often a high-touch, siloed process and within the course of that journey, underwriters lose visibility into a lot of customer data. This impacts the accuracy of their decision-making.

Collaborative cloud-based technology, on the other hand, increases the visibility and usability of data. Read the full article here:

Originally published at https://www.simplesolve.com on February 24, 2022.