Commercial insurers' technology investment growing: Analysis
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Market pressures are catalyzing commercial lines insurers to increase their investment in technology, insurance advisory firm Novarica L.L.C. concludes.
Its analysis, “Business and Technology Trends: Commercial Lines,” found that slow premium growth in the sector has forced commercial insurers to focus on the technology used in underwriting and to invest in product innovation and service improvement.
“While growth is a primary objective, carriers are intent on maintaining underwriting discipline while growing the book” of business, Novarica said in the analysis released last week.
To improve underwriting and better manage catastrophe exposures, commercial insurers are improving data collection and using business rules based on predictive models, the New York-based advisory firm said.
“More and more carriers are using data, predictive analytics, and business rules to try to more consistently apply underwriting expertise and make better underwriting/pricing decisions by aligning pricing actions with risk quality,” Novarica said in the analysis.
Claims technology replacements or upgrades also are popular because they can help insurers improve service while reducing expenses and gaining additional data for underwriting, Novarica said.
Another primary technology goal for commercial lines insurers is replacing outdated policy administration systems.
“Replacement of core policy admin systems continues to be a high priority activity as the modern systems offer significant improvements in a carrier's ability to manage (Insurance Services Office Inc.) changes, add new products, apply underwriting rules, utilize workflow and automated task generation, and streamline the overall process,” according to the analysis. “Browser-based solutions are preferable as commercial carriers often have field underwriters that work from remote locations.”
The report is available here.
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