In the competitive commercial-lines space, technology isbecoming an increasingly important part of insurers' efforts toattract, retain and serve clients, says insurance research andadvisory firm Novarica.

As commercial insurers continue to make investments in keytechnology systems, Novarica analyzed where these carriers arespending most of their dollars. Following are the four toptechnology priorities for commercial insurers, according toNovarica research, followed by a list of carriers' lower-priorityinitiatives.

Business Intelligence

Carriers are investing in business-intelligence tools with anultimate eye toward using models to improve underwriting insights,claims activities and to apply more consistent pricing, accordingto Novarica. The firm says many commercial-lines insurers haveexisting reporting and analysis capabilities in place, such aspackaged solutions. But, Novarica adds, “Carriers are starting toproduce more complex data-analysis models and enhance their abilityto look at multi-dimensional data to the business units.”

Priorities:

• “The ability to gather, store and retrieve the appropriatedata elements neeed to gain insights by improving datamodels—including data warehouses, operational data store (ODS)and datamarts.
• “With increasingly sophisticated models, the ability forthe business to use reporting tools to look at multidimensionaldata.
• “Carriers are increasingly using external providers for data ordata analytics. These components may include estimating tools ormay come with a data-pooling feature allowing smaller carriersto piggyback off the data of others. Some carriers are also utilizing analytical services. Datais provided to the vendor who then performs a service such asfraud analysis or compliance reporting.”

Core Policy Administration Systems

Commercial insurers are investing in modernpolicy-administration systems as they seek to rapidly implementproduct changes—particularly ISO changes, Novarica says. Vendorsare responding to insurers' demands by offering ISO-maintenanceservices.

Novarica says insurers are also able to add new products andapply underwriting rules, among other benefits, by replacing corepolicy-admin systems.

The study notes that insurers prefer browser-based solutions asfield underwriters work from remote locations.

Priorities:

• “Consistent application of underwriting guidelines anddiscipline. More and more this is accomplished by utilizingbusiness rules often based on predictive models. Underwritingdiscipline is a critical management imperative and business ruleshave demonstrated their value in improving underwritingresults.
• “Speed to market for product maintenance and new productdevelopment. The ability to react quickly to a competitivesituation by rapidly adding forms and/or modifying rates.
• “Increasing the efficiency and consistency of the underwritingprocess by adding workflows with automatic task generation.Carriers are working on extending straight-through processingbeyond BOP into the lower end of middle market.”

Core Claims Systems

Novarica contends that commercial insurers are particularlyinterested in upgrading claims systems as they deal withpolicyholders who are more sensitive to claims handling than thosein the personal-lines space. “On the high end,” says Novarica,“commercial accounts often have fulltime risk managers who wantaccess to claims information and are quick to judge the quality ofthe carrier by the quality of the claims experience—and,additionally, have many more comparative opportunities than thetypical [personal-lines] consumer.”

The study says insurers are upgrading claims systems tostreamline and simplify the claims process, utilizing automatedreserving, automated subrogation identification andlitigation-management tools. Novarica also says insurers are usingbusiness rules and workflow to ensure claims are routed to theappropriate adjusters, since commercial carriers tend to haveadjusters that specialize in specific types of claims.

While Novarica says carriers upgrading their claims-adminsystems are realizing “substantial benefits,” the study notes thatother insurers are “taking a more gradual approach.” Novaricacontends, though, that carriers using modern systems “are rapidlygaining competitive advantages” and are achieving better outcomemanagement.

Priorities:

• “Replacing core claims-administration systems to increaseoperational efficiencies and improve data. Automated reserving,integrated workflow and task management and improved documentmanagement are gaining in importance
• “Increasing sophistication in specialized claims such asproducts liability, contractual liability and claims handling likemedical-case management and medical-cost containment.
• “New techniques for identifying potential fraud such aspredictive analytics, network analysis or voice-stress recognitionsoftware. Carriers also want to add capabilities for unstructureddata mining.”

Agent Portals

According to Novarica, commercial insurers are increasinglyextending functionality to agents. “Carriers are maximizing theamount of no-touch interactions via provision of information inelectronic form,” the study says.

Agent portals are common in commercial lines and usage iscontinuing to grow, says Novarica, noting that many carriers arealready on their second- or third-generation portal release. “Ahighly important feature for commercial lines is the ability toattach files and import spreadsheets, particularly for accountswith large vehicle or location schedules,” says the study.

Priorities:

• “Online policy-document access (policies, invoices,correspondence, etc.).
• “New-business submission (including BOP quoting).
• “File-attachment support and spreadsheet import.
• “Agency Management System connectivity (upload/download).”

Lower-Priority Initiatives

Following are other technology areas of interest for insurers,but a bit further off the radar than the four areas mentionedpreviously.

Medium Priority:

DistributionManagement

CustomerPortal

Document Management& Workflow

UnderwriterWorkbench

RatingEngine

Billing

DocumentCreation

SpecializedComponents

Low Priority:

CRM

ReinsuranceManagement

Disbursements

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