Personal Lines Insurers Step Up Investment in Response to Competition—Novarica

Next steps for personal lines P&C carriers will be to integrate telematics data and develop omnichannel strategies.

(Novarica heat map breaks intensity of investment in technology areas into three tiers.)

Personal lines insurers are seeking to keep up with competitors by investing in business intelligence (BI), policy administration systems and connectivity, according to Novarica’s (Boston) new report, Business and Technology Trends: Personal Lines, 2016.

Jeff Goldberg, VP, Research and Consulting, Novarica.

Jeff Goldberg, VP, Research and Consulting, Novarica.

“Personal lines has long been one of the most technically advanced segments of the insurance industry, leading the way on modern configurable core systems, self-service portals for both agents and policyholders, predictive analytics, and pushing boundaries with IoT via the embrace of telematics,” comment Jeff Goldberg, VP of Research and Consulting, Novarica, and lead author of the report. “Investment in these areas continues to grow, but the next frontier for personal lines carriers will be to integrate the experience and insight from these various approaches into an omni-channel strategy.”

Predictive analytics is already well-established in personal lines, but it will enter a new stage of significance, suggests Steve Kaye, AVP of Research and Consulting, Novarica, and Goldberg’s co-author. “The next challenge is leveraging data from telematics,” he advises. “In today’s hypercompetitive environment, advanced analytics and BI are crucial for insurers to get ahead of the competition.”

Technology as Differentiator

Technology is only one aspect of personal lines competition, wherein marketing and branding play a critical role, Goldberg notes. However, while marketing may drive consumer choice, technology can also be an important differentiator, especially as more of the space moves through comparative raters and consumers see it as commoditized. “On the one hand, insurers have to focus on technology to improve ease of doing business for consumers, and on the other they need to focus on becoming smarter and more efficient in ways that the consumers may not directly see,” Goldberg observes. “But both areas are critical to compete. One of the key hurdles going forward will be for insurers to try and unite the experience across different channels and to build insight across their different systems.”

(Below: Novarica’s personal lines spending heat map. Click to enlarge:)

Novarica heat map 2016 spending take 2

Key findings from the report include the following:

  • Self-service and transactional capabilities matter: Agent and customer portals continue to be viewed as key elements of acquiring and retaining customers.
  • Predictive analytics continue to be used across the enterprise: handling data from telematics is the next challenge. Business intelligence and analytics are viewed as key competitive capabilities.
  • Efficient and effective core system workflows are vital to lean operations and rapid product launch.Core systems investments continue to be critical in improving time to market and product flexibility.

    Steve Kaye, AVP of Research and Consulting, Novarica.

    Steve Kaye, AVP of Research and Consulting, Novarica.

Another key finding of the Novarica study is that mobile consumer applications are now commonplace, with telematics emerging as a new competitive battleground, Goldberg stresses. “Most of the top personal lines carriers now offer apps, with accident checklists, agent locators, and claims submission capabilities considered table stakes,” he says.

Telematics and other Internet of Things-related plays will be an important part of insurance’s future, with many insurers experimenting with sensor-driven risk management or loss control, according to Goldberg. “Some companies will invest directly in these technologies, gather the data, and help insureds assess their risk levels,” he predicts. “Others will partner with third party technology companies, either by giving pricing discounts to consumers who use those services or paying for those services as part of the policy price.”

Core Systems Still Insurers’ top Technology Investment, Cloud Options Gain Ground—Novarica Study


Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at or (503) 936-2803.

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