Three ways digitization is helping commercial carriers modernize

Commercial insurers are starting to make significant investments in the digital space. Historically, the market was relatively overlooked and there wasn’t much incentive to change. However, because commercial is a large and potentially very profitable market, it’s now attracting a great deal of attention and corresponding pressure to modernize.

Related: Global commercial insurance prices rise during first quarter of 2019

Improving the customer experience

Commercial stakeholders realize there’s still too much manual work, inefficiencies in distribution and inconsistent levels of customer service and interaction. Fast movers recognize that they’ll be more efficient, attractive to customers and profitable if they’re able to overcome these shortcomings.

There are a few areas in which digital capabilities are helping commercial carriers modernize. For starters, there is considerable innovation in claims. As personal lines started doing over a decade ago, commercial carriers are now investing in capabilities that make it easier to manage a claim online, which expedites the process and increases customer satisfaction and retention. In addition, increasingly comprehensive and comprehensible third-party and in-house data is simplifying online research; understanding of complex products, individual customer and customer segment needs; and the quote and sales process.

Because of the importance of the user experience and the need to more efficiently and profitably serve the market, the commercial operating model will continue to change especially at the front end. Investments in digital capabilities will continue apace and the direct channel will slowly grow in importance. However, because a business’ insurance needs are often bespoke and require a human touch, independent agents will almost certainly continue to be the primary distribution channel for commercial into the foreseeable future.

Digitizing underwriting

Artificial intelligence (AI) is playing a major role in changing underwriting. As a case in point, most personal auto policies are now priced automatically. Digitization has simplified the underwriting process to the point insurers can avoid asking too many questions of the customer, who just wants a quote. There’s enough internal and external data to automate most of the process.

However, in segments of the market like commercial, an underwriter — a human — often has to look at the risk that a carrier underwrites. For at least the time being, human judgment is still important even if models increasingly inform decisions. Accordingly, digitization — in this case, AI — is more about enabling humans to quickly and effectively collect the information they need to adequately assess and underwrite risk, and defining the technologically augmented process they need to follow to underwrite that risk. This is resulting in enhanced underwriting discipline that is defined by an increasingly consistent approach to underwriting risks and greater understanding of and control over underwriting decisions.

Related: Leveraging AI for intelligent process automation

Underwriting talent

Talent — especially underwriting talent — is an insurance company’s lifeblood. Carriers exert a considerable effort trying to attract the most qualified people. As carriers consider the underwriting workforce of the future and how to evaluate their underwriting talent, they’re looking at not only existing underwriting acumen but also how to develop it.

For example, as AI and data digitization are becoming more prominent, carriers are devoting considerable attention to helping underwriters use models and AI driven tools to supplement their knowledge. As a result, underwriters are becoming increasingly comfortable marrying what they’ve learned from personal experience with insight from models to make the most informed decisions possible.

Carriers also are training experienced underwriters to document and transmit their lifelong expertise to more junior underwriters. Digitization is playing a major role in this. It’s converting the knowledge that resides within an insurer to make it more permanent and available to new generations of underwriters. Making this knowledge institutional creates a more connected and informed workforce, as well as help make existing employees happier and attracts new ones. More importantly, it puts the insurance company itself in a better position to profitably grow.

In conclusion, commercial is a proving ground for people and machines working together to create a better outcome for carriers, their employees, agents and customers. While the segment is just embarking on the modernization process, the companies out in front are already benefitting from augmenting their front and back end operations. Digital advances in claims processing; underwriting; customer service; and workforce systems, processes, and knowledge are resulting in improved efficiencies, a more connected workforce, lower costs, and happier customers.

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