No market is more competitive in the insurance world than personal lines. We don't need any more proof of this than the onslaught of advertisements on television for our favorite insurers.
The list of the leading personal-auto insurers by market-share percentage probably coincides very closely with the percentage of dollars spent on advertising. Our friends at Highline Data (owned by NU's parent company) report that 2010's Top 10 in percent of the market are: State Farm, 18.1 percent; Allstate, 10.4 percent; Berkshire Hathaway, 8.6 percent; Progressive, 7.8 percent; Zurich, 6.1 percent; Liberty Mutual 4.6 percent; USAA, 4.4 percent; Nationwide, 4.3 percent; Travelers, 2.1 percent; and American Family, 2.0 percent.
The major carriers dominate the market like no other line. Add up all those figures, and you'll see that the 10 biggest players account for 68.4 percent of the market.
But savvy, smaller carriers have learned that technology is the great equalizer. Anyone—with the right tools available—can compete with the top-tier insurers and their massive, prime-time media buys.
Novarica's Karlyn Carnahan recently published a research report ("Business and Technology Trends: Personal Lines") and she listed the top technology priorities for personal-lines insurers:
• Extending functionality to the agents
• Upgrading your policy-administration system to gain operational efficiencies and flexibility
• Business intelligence through a data-quality initiative
• Streamlining claims management by automating processes to improve customer service
It is interesting that, considering the growth of the direct channels, Carnahan would list agent functionality at the top of the list, but the other priorities are hardly surprising for personal lines or any other line of business. Those with the best systems do well in competing with major carriers—no matter what their advertising budget is.
Carnahan also listed the top business priorities for personal-lines insurers in her research report:
• Consistent application of underwriting guidelines and discipline by utilizing business rules based on predictive models.
• Speed to market for new products and maintenance of ongoing products.
• Increasing the efficiency and consistency of the underwriting process by adding workflows with automatic task generation and by integrating third-party data sources to improve accuracy and speed.
If you noticed that all of these business priorities—each and every one of them—are enhanced by technology, then you are ready to take on the ubiquitous gecko, Allstate's Mayhem, Progressive's perky Flo, or even (Allstate again) former President David Palmer. Nationwide may be on your side—but if you are a smaller force in the market, so is technology.
Robert Regis Hyle
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