Future-Proofing Specialty Insurance by Leveraging Cloud-Based Solutions

The future of specialty insurance lies in embracing technological advancements, leveraging data-driven insights, and adopting flexible solutions that cater to the changing landscape of risks.

FREMONT, CA: Specialty insurers must adapt to the future by enhancing their technological infrastructure to streamline the underwriting process and effectively address the evolving risks they face. Specialty insurers historically lacked automation assistance compared to mainstream insurers, but insurtech has equipped them to meet the challenges ahead. The future of specialty insurance will see underwriters focusing on the nuances of each risk, moving away from generalizations.

Recent events prompted many companies to consider remote work policies to boost employee retention. However, the increase in remote workers also heightened the risk of cyber threats such as phishing, malware, and ransomware. Reports show a significant 50 to 150 percent surge in cyber liability rates in 2022. As specialty line carriers grapple with these demands, it is evident that these risks are no longer rare occurrences but have become more specialized and common in the insurance landscape.

In the last two decades, 68 percent of extreme weather events have been caused by human activities.This volatility in climate changes makes historical climate data less reliable for predicting future events. Insurers must reevaluate their catastrophe models to account for these uncertainties. The emergence of tropical diseases in new areas and unprecedented natural disasters in certain regions further complicate risk assessment. Also, insurers must better prepare for future pandemics and other unforeseen events.

To address these expanding risks effectively, specialty insurers must invest in robust technological infrastructure for underwriting and modeling processes. Underwriting and product teams must be agile in modifying products more frequently to keep up with fast-moving markets and data. DRC's RS X Rating empowers teams to self-service changes at the rate of business, allowing them to respond quickly to market dynamics without relying heavily on IT and vendor resources.

Cloud-connected data sources and reporting tools are crucial for specialty insurers to promptly access near real-time data and react to future markets. DRC's microservice architecture and APIs offer a highly configurable policy administration system and a robust rating engine, enabling product development flexibility and accelerating entry into profitable niches.

Insurtech services must be user-friendly and familiar to underwriters, enabling them to make well-informed decisions for their clients. Each risk is unique, and specialty insurers need the flexibility to offer tailored products that meet each client's specific needs. This includes understanding that the best product for one remote worker may not be suitable for another, and the optimal insurance coverage for a beach house may differ from that of a cabin in the mountains. By prioritizing efficient underwriting processes and staying agile in response to emerging challenges, specialty insurers can navigate the complexities of the future and provide optimal coverage for their clients.