Typically, a digital transformational technology involves the combination of digital technology into the complete areas of a business. The strategy fundamentally changes how the organization operates and delivers value to its customers. It also encompasses a cultural change that needs business organizations to challenge the norms, experiment, and be comfortable with failure.
Historically, commercial insurers are slow to adopt technology compared to private insurers or their sister industries of banking and financial services, primarily hoping on broker-driven, highly manual processes. Even today, commercial lines are smitten by face-to-face interactions, paper documents, and legacy systems that can’t provide the rich functionality that today’s business users demand.
Policyholders faced innumerable challenges within the past two years, leading to unprecedented changes to their consumer behaviour. Personal lines insurers responded swiftly to satisfy insureds’ new and evolving needs. They went all-in on digital self-servicing capabilities for patrons, agents, and employees, but recent market activity suggests that commercial insurers’ top technology priorities of the past year is also different in 2022.
New research from SMA shows that the plans and progress of some transformational technologies are accelerating ahead as others have hit the brakes.
Of the thirteen technologies deemed transformational within the report, including AI-related innovations et al that fall outside of the AI family, six are seen as having a short-term impact on personal lines, yielding significant changes to business operations and also the customer experience. The report also examines technologies within the mid-term horizon that are expected to become more mainstream within the industry within the next 2-3 years and long-term horizon technologies predicted to own outcomes further within the future.
Commercial insurers are currently reprioritizing their plans with a mix of investment activity and maturity levels. Research shows insurers currently favor digital capabilities that replace face-to-face interactions – continuing a trend that emerged early within the pandemic. One example of a technology under rapid development is virtual payments. Nearly seven in ten commercial insurers report investing in digital payment technologies during the pandemic. While the initial focus has been on inbound payment solutions, SMA observes that piloting and implementation of outbound claims payment solutions are already setting out to expand.
When observing long-term horizon transformational technologies, 5G/edge computing shows increased promise in personal lines, with more insurers reporting interest within the technology now than in previous studies. Many of the probabilities associated with the web of Things, autonomous vehicles, new user interaction technologies, et al will depend highly on the widespread availability and adoption of 5G. because the technology becomes more widely adopted, it’s likely to maneuverer to the mid-term horizon before becoming a short-term horizon technology.
As the pandemic continues to play out and a post-COVID era emerges, personal lines insurers will continually must review and revise their technology strategies and plans. The move toward broad-based digital capabilities would require insurers to grasp how specific technologies contribute to digital transformation and the way priorities and roadmaps are changing within the current environment.