The traditionally stable P&C personal lines insurance industry has been shaken up due to the pandemic. Insurers have been used to adjusting to economic swings and catastrophes that affect volumes and financials. Those kinds of adjustments are business as usual for the industry.
But the dramatic changes in customer behaviors and patterns fomented by the COVID-19 pandemic and related lockdowns are new experiences for the industry. Driving miles, personal travel, work-from-home mandates, and online ordering and delivery of food and goods combined to create new challenges for carriers. Seismic shifts in claims volumes, support for agents and employees working remotely, and customer demands and expectations for digital interactions required companies to rethink their technology plans.
Personal lines insurers’ approach to technology
SMA has conducted a series of market pulse polls throughout the pandemic, starting in April 2020, as the initial economic lockdowns and work-from-home mandates began to take hold. Our latest survey, conducted in May of this year, aims to assess how plans are changing and being reshaped as personal lines insurers move forward in the second half of 2021 and formulate strategies for early 2022. Whether we are moving toward a post-pandemic era in the U.S. is debatable, but what seems clear from the plans of personal lines insurers is that tech-related plans are moving ahead full steam.
We have observed that after the initial tactical responses in the early stages of the pandemic, there was a great deal of rethinking, reprioritization, and new activity related to technology plans. The initial wave in the spring of 2020 focused on enabling a remote workforce and providing critical digital capabilities to agents and policyholders, not to mention the significant rebates provided to policyholders. But when the fall arrived, the technology roadmap became the subject of major review. Many carriers stayed the course — continuing some of the shifts they initiated in the second quarter.
However, some also stopped or paused projects (about one in eight insurers), and some of the more innovation-related activities were pushed out to 2022. But gaps were exposed in areas like first-notice-of-loss and payments, and the need to make these areas digital pushed them to the top of the list. Personal lines companies have been busily implementing or enhancing these capabilities and the general self-service capabilities.
Fast forward to the middle of 2021. What are insurers planning for the second half and into 2022? SMA’s most recently completed Market Pulse survey shows that virtually no companies plan to retrench or pause project activity in the second half. There is a significant amount of rethinking for roadmaps and project reprioritizations, with almost 60% still saying they are reshaping or accelerating plans. The flurry of activity signals an acceleration in digital transformation. And it is also a signal that the next couple of years are likely to see a further leap forward in the industry’s overall transformation. So, fasten your seatbelts and get ready for the road ahead.
Mark Breading ([email protected]) is a partner at Strategy Meets Action (SMA), a ReSourcePro company that serves as a strategic advisory firm working with traditional insurers and InsurTech solution providers to manage unprecedented industry change. The opinions expressed here are the author’s own.
This column was first published on SMA’s blog and is republished here with consent from SMA.