New SMA Blog by Heather Turner, Lead Research Analyst, Strategy Meets Action —
It is difficult to imagine where digital business operations would be today if it weren’t for the catalyst that is the pandemic. For nearly two years, businesses across industries, and especially within insurance, accelerated digital transformation plans to adapt to remote access for customers and employees. Insurers prioritized many self-service capabilities, such as virtual inspections, digital payments, and automated workflows while also focusing on investing in artificial intelligence (AI), the Internet of Things (IoT), new user interaction tech, and other advanced technologies. However, as the effects of the pandemic continue to play out, market activity indicates commercial lines insurers are reprioritizing their tech-oriented projects, with some plans continuing to move forward while others have slowed down.
Today, there are thirteen “transformational” technologies working with foundational technologies, such as core systems, portals, CRM systems, and others, to move the insurance industry into the new digital-connected era. A new SMA research report, “Transformational Technologies in P&C Commercial Lines: Insurer Progress, Plans, and Predictions,” examines these technologies and how they will impact commercial lines insurers now and in the future.
Commercial lines insurers are approaching both AI-related and non-AI-related transformational technologies at varying levels of investment and rates of adoption. Over the years, SMA has monitored these technologies, organizing them into three strategic planning horizons: short-term, mid-term, and long-term.
In 2022, computer vision, IoT, machine learning (ML), natural language processing, robotic process automation, user interaction tech, and virtual payments will continue to garner significant activity and yield a high impact on commercial lines. However, some insurers indicate they are decelerating their plans for certain short-term horizon technologies. Last year, 51% of commercial insurers said they were in the midst of new implementations of ML solutions, but the plans through 2022 show only 45% implementing, primarily among Tier 3 and 4 companies. This pullback in building ML capabilities for smaller insurers is mainly due to the events surrounding the COVID health crisis.
When looking further into the future, 5G/edge computing, blockchain, AR/VR, and autonomous vehicles are expected to have a transformational impact on the industry. Compared to a year ago, more commercial lines executives recognize their potential in certain business segments. For example, the potential for 5G/edge computing increases as the major wireless networks expand coverage and more devices accommodate the technologies. In a 2021 SMA survey, 24% of commercial lines insurers reported that they are monitoring and developing initial strategies around 5G/edge computing, up from just 18% in 2020. A range of areas within commercial insurance can be transformed by 5G, including IoT, autonomous vehicles, and new UI technologies. So as the technology becomes more widely adopted, it will likely become a short-term horizon technology for insurers’ planning purposes.
The transformational technologies underway in the industry today will only become more critical as virtual and digital interactions become the norm. Regardless of where commercial insurers are on their digital transformation journey, their strategies must be continually reviewed and revised in today’s ever-evolving technology landscape.
For more information on how commercial lines insurers plan to make use of these technologies, see SMA’s recently published research report: “Transformational Technologies in P&C Commercial Lines: Insurer Progress, Plans, and Predictions.”
About The Author
As the Lead Research Analyst at SMA, Heather Turner supports SMA’s advisory and consulting engagements through rich written content, quantitative and qualitative primary research, market and technology trend analysis, and the management of SMA IP materials. Prior to SMA, Heather was managing editor of the NU Property & Casualty Group at ALM, which includes the insurance industry publications PropertyCasualty360.com and NU P&C and Claims magazines. She started her career as a journalist reporting on the property & casualty insurance industry at Insurance Business America and its sister publications in Canada and the UK.
Heather is a graduate of Florida State University, where she earned her bachelor’s degree in Editing, Writing, and Media.
About SMA, a ReSource Pro company
Strategy Meets Action is an industry-leading strategic advisory firm delivering strategic insights, consulting services, and published research to carriers, solution providers, and InsurTech startups. The firm provides insights and guidance on business strategy, digital transformation, core systems and customer experience. Learn more about SMA at www.strategymeetsaction.com.
SOURCE: Strategy Meets Action (SMA)