Turbocharging the specialty insurance market has been saved
Perspectives
Turbocharging the specialty insurance market
Maintaining growth in the ever-evolving landscape
How can carriers maintain momentum during an unprecedented growth phase in the specialty insurance market? The future will hinge on their ability to integrate flexible technology. Our article outlines three typical transformation pathways for carriers and the distinct technology capabilities needed for each scenario.
The specialty insurance market landscape
Specialty insurance refers to a type of insurance that provides coverage for risks typically not covered under standard insurance policies. Unlike standard insurance policies, which are designed to provide insurance coverage for risks such as personal automobile and personal or commercial property, specialty insurance policies are tailored to address niche or unusual risks that require very specialized knowledge. The key benefit is the flexibility available to allow customers or businesses to obtain insurance coverage on both admitted and non-admitted bases, which may otherwise be unavailable or unaffordable in the standard commercial property and casualty (P&C) insurance markets.
Over the past few years there has been unprecedented growth in the specialty insurance market with industry analysts forecasting continued material growth over the next several years. The global specialty insurance market was valued at $104.7 billion in 2021 and is projected to reach $279 billion by 2031—a CAGR of 10.6% during this 10-year period.
Carriers can sustain growth by quickly rolling out cost-effective products, streamlining operations, establishing feedback loops, and adapting to specialty insurance market dynamics with flexible technology. In this report, we explore the driving factors of specialty insurance growth and the digital capabilities carriers need to meet market demands, according to three common transformation scenarios.
The path to sustainable growth: Three transformation scenarios
Specialty carriers fitting into scenario one are typically operating with manual processes, with little to no workflow, and automation capabilities are accessing multiple disparate systems that can lead to errors in documents, data capture, and calculations. These process inefficiencies are some of the major factors increasing the total cost of operations and high recovery efforts related to the core policy processing. Specialty carriers, at this pivotal phase of their transformation journey, should prioritize their investments with the following modernization capabilities with a focus on streamlining business processes and operations:
● Modular product architecture and designs to facilitate a scalable and reusable solution
● Modern software-as-a-service (SaaS) platform that addresses “speed to market” and enables the organization’s needs of the future
● API-driven architecture to improve ease of doing business and enable digital portals efficiently
Specialty carriers in scenario two are continuously looking for opportunities to innovate, digitize, and automate their current processes by leveraging advanced tools and technologies. Carriers at this stage should take advantage of the following considerations to extend their current core systems and expand their analytics ambitions to facilitate advanced data mining and modeling capabilities:
● Highly digitized and automated distribution channels for agents and brokers to gain operational efficiencies and straight-through processing
● Enhanced underwriting workflow experience and risk selection via automation, predictive modeling, portfolio monitoring, reporting, and analytics
● Robust data foundation established by implementing cloud data warehouses, operational data stores, and data marts to improve speed to insight on market risk and pricing intelligence
Specialty carriers in scenario three are investing in advanced capabilities for a competitive edge and innovative solutions. The growing use of artificial intelligence and automation, amid intense pricing competition, is fueling demand for improved underwriting and claims processes across all market segments. Predictive modeling is increasingly guiding strategies, especially in segments like management and professional liability. Carriers at this phase should explore the following state-of-the-art technology-driven solutions for ensuring operational efficiency and strategic positioning within the competitive landscape of specialty insurance:
● GenAI-enabled intelligent automation to improve underwriting efficiencies
● Extending predictive model solutions that can enhance the organization’s success in analytics for market differentiation
● Integrated unstructured text ingestion solutions based on AI and ML technologies
Looking ahead
Carriers looking to tap into or sustain growth during this unprecedented growth phase in the specialty insurance market need to act regardless of which scenario they closely align to. The future of specialty carriers hinges on their ability to integrate forward-looking technologies seamlessly, providing a responsive and customer-centric insurance experience in an ever-evolving landscape. Read the full report for an in-depth look at each scenario and the digital capabilities carriers will need to drive sustainable growth.
Endnotes:
1. GitHub, “TELUS streamlined productivity by replacing their DevOps tools with GitHub,” accessed April 2024.
2. GitHub, “Duolingo empowers its engineers to be force multipliers for expertise with GitHub Copilot and Codespaces,” accessed April 2024.
