Embracing Specialty Lines: Navigating the Changing Landscape of Commercial Brokers

Navigating the evolving landscape of commercial brokers serving SMEs and startups requires innovation and adaptability. Specialty lines insurance allows brokers to cater to underserved and niche markets.

FREMONT, CA: Commercial brokers catering to small to medium-sized enterprises (SMEs) and startups face increasing pressure in today's competitive market. With new entrants in the insurance industry and the digitization efforts of carriers, it has become more challenging for brokers to stand out. However, venturing into specialty lines offers an opportunity to serve underserved and niche markets that larger competitors may overlook. While the growth potential is evident in these areas, brokers also face significant pressure. Insurers and new entrants like banks may lack expertise in specialty or technology-focused sectors, making it easier for retail brokers to provide value in those domains.

The specialty lines insurance market focuses on underwriting more unusual and higher-risk accounts. This segment deals with unique risks, requiring specialized rules and processes. Insurance companies in this market possess expertise in rating and underwriting various unconventional risks. They collaborate with brokers who specialize in handling specialty lines. Often, brokers drive the demand for new product development as they strive to address the coverage requirements of their clients.

Specialty lines insurance primarily covers two types of products: uncommon risks and higher-risk accounts. Examples include professional liability for trustees, which falls under the specialty lines market due to the complexity of underwriting and rating, and manufacturers of dangerous chemicals, who face extreme liability exposures and high claim severity. While it is challenging to estimate the exact market size, the total premium volume in the specialty lines market reaches tens of billions of dollars.

A few custom providers have captured a significant portion of niche markets in the specialty lines market. However, carriers often face challenges with implementation costs and timelines, as they have limited options when selecting solutions. Consequently, some larger carriers have developed solutions using their internal IT teams. While this approach has been successful, it has led carriers to enter the software product development business for as long as these homegrown solutions exist.

A new solution option has emerged in the specialty lines space, leveraging low-code software development platforms to build the specialty line insurance ecosystem. This option is particularly attractive to carriers operating on a limited budget for solution development. One of the main advantages of low-code Software-as-a-Service (SaaS) platforms is their ability to enable insurance providers to rapidly build specialty line solutions at high speed. These platforms allow users to focus primarily on their domain expertise, eliminating the need for a large IT team to build a specialty lines solution. A robust low-code platform provides a user-friendly interface (UI) builder for rapid construction of the front end, along with a visual flow engine and simple scripting for encoding backend business rules. Additionally, a well-designed low-code platform minimizes the requirement for a DevOps team.

Leading-edge low-code platforms now incorporate AI-driven development tools, further accelerating the development of specialty line solutions for carriers with limited budgets and technical resources. This combination of AI and low-code capabilities enables the rapid deployment of fully-managed specialty line digital solutions within weeks. These solutions are compatible with multiple platforms, including laptops, tablets, and cell phones, with minimal effort from the development team. Moreover, they offer ease of modification and extension.

By leveraging low-code software development platforms, carriers can rapidly build and deploy fully-managed specialty line digital solutions, even with limited budgets and technical resources. This approach enables efficient implementation, enhances flexibility, and accelerates the delivery of solutions, empowering brokers to differentiate themselves in a competitive market.