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Transformation in the property/casualty personal lines segment has been underway for some time as insurers position for success in the digital age. SMA has been tracking and supporting this transformation over the last decade and now observes an important shift in strategy. For some time, insurers have been focused on what we call foundational strategic initiatives, such as core transformation, business intelligence, new product innovation, and workforce restructuring. These areas remain vital going forward and do, in fact, form the base for bolder and more innovative strategies in the future. Now the emphasis is shifting toward transformational strategic initiatives, aimed at adapting to rapidly evolving external forces and rethinking even the fundamentals of the insurance business. Examples of transformational initiatives include comprehensive digital transformation strategies, customer experience initiatives, exploring new business models, and investing and partnering in InsurTech startups and emerging technologies.
What is very important to grasp are the interdependencies of these strategic initiatives, especially between the foundational and transformational initiatives. For example, an assessment of core systems reveals that today’s policy, billing, and claims systems will continue to evolve and be enabled by capabilities from the transformational initiatives that are now underway. The core systems will continue to be enhanced to support digital transactions. Emerging technologies such as artificial intelligence will have a significant impact on core systems. Core systems will also require the ability to interact with advanced user interfaces, new payment technologies, and support IoT-based solutions.
The restructuring of the workforce is ongoing as more workers transition to remote worker situations, millennials join the workforce in droves, and seasoned professionals retire in record numbers. It has become increasingly important to consider how the transformational strategic initiatives are factoring into workforce planning. For example, new roles are being created as a result of the attention and activity related to improving the customer experience, the mandate to become more digital, and the expertise required for big data/analytics undertakings. AI is also a hot topic in planning for the workforce of the future. Automation and AI will increasingly assume the tasks of some workers today, transform the roles of others, and create brand new jobs that must be accounted for.
In addition to the interdependencies among strategic initiatives, it is useful to understand the level and nature of activities in specific areas. For example, a remarkable 97 percent of property/casualty personal lines insurers say they are exploring new business models, although the majority are in the earlier stages of this exploration. Also, areas such as digital transformation and customer experience are dominating the conversation in the industry and the research confirms the high level of activity in these areas.
Mid-Stride in the Transformation Journey
The full picture demonstrates that P&C personal lines are hitting mid-stride in the transformation journey, with plans to accelerate execution as they shift toward the true transformational types of initiatives. It is indeed a time for strong leadership and aggressive strategies, leading to an industry that is bound to look quite different in five to ten years.
SMA’s recent research report, 2019 Strategic Initiatives: P&C Personal Lines, provides details on 13 strategic initiatives and where insurers are in their journeys for each one (for example what percentage of insurers have no plans, are developing their strategies, are in initial implementations, or in broad deployment). Insurer approaches to InsurTech and emerging technology are also discussed, based on an SMA survey and observations.