Heather serves as the Lead Research Analyst at ReSource Pro Consulting.
From Accelerating to Reprioritizing Tech-Oriented Plans
It is difficult to imagine where digital business operations would be today if it wasn’t for the catalyst that is the pandemic. For nearly two years, businesses across industries, and especially within insurance, accelerated digital transformation plans to adapt to remote access for customers and employees.
For property and casualty commercial insurers, self-service capabilities were a key priority, including virtual inspections, digital payments, and automated workflows. Insurers’ investments also focused on artificial intelligence (AI), the Internet of Things (IoT), new user interaction tech, and other advanced technologies.
However, as the effects of the pandemic continue to play out, ReSource Pro Consulting research indicates that commercial lines insurers are reprioritizing their tech-oriented projects, with some plans continuing to move forward while others have slowed down.
Transformational Technologies Now and in the Future
Today, there are thirteen “transformational” technologies working with foundational technologies, such as core systems, portals, CRM systems, and others, to move the insurance industry into the new digital-connected era. Commercial lines insurers are approaching both AI-related and non-AI-related transformational technologies at varying levels of investment and rates of adoption. Over the years, we have monitored these technologies, organizing them into three strategic planning horizons: short-term, mid-term, and long-term.
In 2022, computer vision, IoT, machine learning (ML), natural language processing, robotic process automation, user interaction tech, and virtual payments will continue to garner significant activity and yield a high impact on commercial lines. However, some insurers indicate they are decelerating their plans for certain short-term horizon technologies.
In 2020, 51% of commercial insurers said they were in the midst of new implementations of ML solutions, but the plans through 2022 show only 45% implementing, primarily among Tier 3 and 4 companies. This pullback in building ML capabilities for smaller insurers is mainly due to the events surrounding the COVID health crisis.
Looking to the future, 5G/edge computing, blockchain, AR/VR, and autonomous vehicles are expected to have a transformational impact on the industry. Compared to a year ago, more commercial lines executives recognize their potential in certain business segments. For example, the potential for 5G/edge computing increases as the major wireless networks expand coverage and more devices accommodate the technologies. In a 2021 ReSource Pro Consulting survey, 24% of commercial lines insurers reported that they are monitoring and developing initial strategies around 5G/edge computing, up from just 18% in 2020.
A range of areas within commercial insurance can be transformed by 5G, including IoT, autonomous vehicles, and new UI technologies. So as the technology becomes more widely adopted, it will likely become a short-term horizon technology for insurers’ planning purposes.
Digital Transformation Strategies Must Evolve With the Tech Landscape
The transformational technologies underway in the industry today will only become more critical as virtual and digital interactions become the norm. Regardless of where commercial insurers are on their digital transformation journey, their strategies must be continually reviewed and revised in today’s ever-evolving technology landscape.
For more information on how commercial lines insurers plan to make use of transformational technologies, see our recently published research report: “Transformational Technologies in P&C Commercial Lines: Insurer Progress, Plans, and Predictions.” Visit our Carrier Consulting page to learn how we can help carriers navigate the challenges of digital transformation.