Up until recently, great products and services, paired with outstanding service, were the foundational elements of a successful insurance company. For businesses operating in niche markets, offering a unique P&C coverage to smaller and underserved industries, has been and will continue to be a cornerstone of their model. Unfortunately, with adoption of technology and deeper layers of automation, large scale insurance companies are able to compete in unprecedented ways – pushing regional and local providers to reassess their strategy over the next decade.
Leaders within the insurance industry have realized that within the life-cycle of any insurance program, there are three core value drivers: Drive Premium, Reduce Combined Ratios, and Provide Greater Services. With each of these anchoring principles in mind, they have aligning strategy and operational practices within the business that are targeted at creating measurable outcomes in each area.
Drive Premium
Direct written premium is the life blood of every insurance program. Maximizing the market share is critical to any business and for insurance companies, there are many strategies for doing so. Carriers and other growth-oriented programs like mutuals, will continue to look for new ways to bring on new customers. Other programs like self-insured groups and funds, are more driven to retain and expand upon the value they bring to their existing members.
Each of these are critical to understand, when evaluating methods for digital transformation. Primarily with regards to how the expectations of customers has evolved. Agents and insureds alike, expect a seamless digital experience from their providers.
Businesses that have effectively gone through digital transformation efforts have reported a 1-2% lift in premium, as well as higher retention rates for their existing customer base. These outcomes have been driven from heightened operational efficiencies that are realized in the underwriting and agency management processes. For many organizations, they are able to create additional focus around strategic initiatives and scale upon their abilities to capture premium, without the addition of additional resources.
This is key, as this opens up opportunities to invest back into the business and help reduce costs through safety, claims management, and better relationships with members.
