The nature and speed of the transformation will play out quite differently for small/medium/large commercial, workers’ comp and specialty lines. And the stage of the transformation journey may be very different based on business strategies, the appetite for innovation, emerging technologies, InsurTech, and the geographic scope of the insurer.
But the overriding theme is that commercial lines insurers are more aggressively looking to go beyond business as usual. They are rethinking business strategies to ensure growth and profitability while adjusting to the changes in the competitive and industry landscape.
Our latest (and 8th) annual research study, 2018 Strategic Initiatives: P&C Commercial Linesaddresses 12 strategic initiatives, spending, and priorities for 2018. The report reflects big increases in five key initiatives; digital transformational, innovation, core modernization, data and advanced analytics, and customer experience, with over 90% of insurers stating they are either planning, beginning investment, or are in full deployment in these areas.
Digital transformation and innovation are up from below 50% in 2017 — a significant increase. And emerging technologies and InsurTech are reaching all-time highs of 87% and 58% respectively.
Across commercial lines, leadership teams are experiencing a new urgency to transform, and many are making significant investments toward creating and positioning for the future of insurance. Even though the commercial market financials and results continue to be cyclical, the industry remains financially strong. This allows for expansion in investments in transformational initiatives alongside the traditional ones.
Most executive teams understand that the digital, connected world is evolving rapidly, and the competition is coming (not only from new corners but also from within the walls of the traditional industry). As a result, one of the biggest challenges for insurers is linking and balancing the initiatives of the traditional world with those of the new world, a key undertaking for achieving success in the age of digital transformation.
Every insurer actively must seek to understand and track activities in the InsurTech and emerging tech spaces. It helps to create a way to evaluate new activities and align them to your business strategy.
Culture of innovation mandatory
Actively engaging customers in the digital age and creating a culture of innovation are also mandatory. Perhaps the most important things for senior leaders to do are to ensure that the organization is considering and prioritizing the strategic initiatives identified in the report and then motivating and energizing employees across the organization to be open to the vast possibilities afforded by the convergence of traditional with the new.
It would be a mistake to think that your company will be unaffected by the new developments.