Ways Next-Gen Technologies Modernize Specialty Insurance

Insurers use data and digital assets to reduce operational expenses and accomplish profitable underwriting. 

FREMONT, CA: Insurers and brokers in the specialty insurance industry invest in digital and data capabilities to modernize operations and serve their consumers as the possibility of a recession and the pressure to deliver more excellent value to stakeholders increases. Insurers prioritize adopting technologies to be more nimble in responding to emergent risks, driving growth, enhancing the customer experience, and transforming the cost of operations. The insurance industry is implementing next-generation technologies to enhance underwriting, claims processing, and customer engagement. Clients require insurers and underwriters to provide hyper-personalized risk advisory and management services and to cover insurance risks.

With the customer journey in mind, there is a shift from a document-centric process to the utilization of intelligent data. For specialty insurers, seamlessly integrating within the ecosystem and sharing external data through exchanges is becoming a crucial capability. It has assisted them in creating value across customer-centric product coverage and terms, self-service, and integrated engagements across multiple engagement channels. With the advancement of technology trends such as Cloud, AI, and ML to obtain insights from data, omnichannel customer engagement, Internet of Things (IoTs), and 5G, the industry is developing capabilities and adapting to change.

Understanding the complexities of the specialty insurance market is essential. As a niche insurance segment, specialty insurance covers complex, non-standard, and unusual risks. There are political and terrorism risks and aviation and space industry risks. As a result of difficulties such as these, clients seek risk assessment and underwriting expertise to obtain the appropriate coverage. Given the chance of claims for consequential losses, it is not uncommon for a consortium of Lead and Follow Insurers to subscribe jointly to portions of the risk liability. Specialty insurance provides financial protection and the resilience to recover from a loss.

Considering macroeconomic headwinds such as inflation, high interest rates, and the rising cost of living, customer awareness of underinsurance risks and challenges has increased in recent years. Due to inflation, insurance premiums have also increased, heightening the need for intermediaries and insurers to engage with customers more effectively. It has accelerated the need for insurers and brokers to shift from product-centricity to customer-centricity. Most insurance digitalization initiatives in 2023 will be aimed at improving the consumer experience and achieve operational excellence. AI/ML is gaining prominence as well. 

Multiple stakeholders are involved, including retail brokers, wholesale brokers, MGAs, insurers, and re-insurers, which can lead to duplication of effort and friction throughout the customer journey. Such complexities can result in increased premium costs. Customers are evaluating alternative markets and insurers that can assist them in obtaining risk capital at substantially lower prices. Across the entire value chain, streamlining business processes and reducing distribution costs have become essential. IoT devices are also assisting insurers with more precise pricing. Insurers can use this data with external information to accurately profile a vessel's risk level in real-time.