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Facing the Future: 6 Things You Need to Know About What’s Ahead in the Insurance Industry

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It’s an exciting time in the insurance industry, and data, analytics and technology are enabling the distribution system to provide consumers with an enriched experience. David Nelson, SVP, Contract Underwriting at Nationwide E&S/Specialty, and Chris Cline, National Agency Distribution Leader at Westfield, shared their insights on what lies ahead.

1. Data is How We Can Do More Together

There’s a treasure trove of data available in the E&S space to assist with product development and delivery, says Nelson. Leveraging it will allow carriers and others to better understand their business, look at enhancing existing coverages to address gaps, and develop products designed to respond to exposures not currently covered.

To do so, however, involves doing your homework and understanding the data to determine how to move forward. It also means aligning your underwriting teams along with your distribution partners to make sure the products you’re putting into the marketplace will perform.

With people spending less time on the road, Nelson sees an opportunity to engage in deeper conversations around data, data sharing, and the ability to make sound underwriting decisions.

“In conversations with a number of our partners, I see a tremendous willingness for folks to not only gather data but to also share it in order to understand the performance of their portfolio or their business and how to do more together.”

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2. InsurTechs Have Pushed the Industry to Innovate

Investments in platforms for ease of business will surely continue. Nelson’s company, for example, is making tremendous inroads in facilitating the underwriting process across multiple product lines. Forging a new path in advanced analytics – from predictive analytics to AI – is another key area of investment.

“Our goal is to take both internal and external data [from third parties] and bring it to life for our partners to share insights about what products are most profitable to target while also eliminating friction and touchpoints involved throughout a transaction,” he says.

Pushing this effort in the E&S space and overall in the P&C market are InsurTech firms and what they have accomplished.

“The InsurTechs have challenged the industry to innovate and think differently and that’s a good thing,” Nelson noted.

3. We Need to Be Good Data Stewards

In discussing the proliferation in the utilization of data, AI and predictive modelling, Cline acknowledges its tremendous value to the industry while at the same time addresses the growing concern around consumer privacy.

“How do you make sure personal information is protected and in compliance with the privacy expectations of customers?” he asks.

It’s an issue that needs to be addressed as we move forward with the increased use of data in product development and insurance transactions. As a partner with insureds, Cline says, we need to be good stewards of people’s information.

4. Insurance Agencies Are Evolving

Agency organic growth amidst the pandemic, depending on an agency’s mix of business and target classes, has yielded varied financial returns, Cline says. For example, agencies focused on the hospitality industry were doing very well prior to COVID, but today are having very different conversations with their carriers. 

On the flip side, there are agencies that have had record-breaking months, particularly those already heavily invested in digital and SEO and good with using analytics to target new consumers and businesses.

“These agencies were able to continue to interact and grow…there really wasn’t any disruption for them,” Cline explains.

Cline’s company was fortunate to have a modern environment and the tools in place to work remotely when COVID hit. The issue now is how to go from this forced business continuity phase to the way we will conduct business moving forward.

“You realize you can actually have a business discussion with an agency using video. If everyone is using the same tools, business conversations are just as hardy and fruitful as they were before. In fact, you’re able to engage with more people and it’s less disruptive to the agency,” he says.

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5. The Future of Insurance Distribution is Changing

When asked about what the future of the insurance distribution looks like and if he sees any changes down the road, Cline said that those who continue to remain disciplined, are willing to reinvent, invest in tools and focus on the customer experience – how and where customers want to interact – will continue to have a great deal of success.

This doesn’t mean there won’t be changes with consumers going direct to carriers. There will also be continued growth in the aggregators and network space attracting more member agencies.

6. Diverse Hiring Means Both Demographics and Thought

Cline emphasizes the importance of small to midsize agencies being intentional around the culture of continually hiring. Hiring should be diverse, not only in demographics but in thought.

“Don't hire yourself…if you're bringing in new blood, bring in individuals with a fresher look at the customer, the market. If you proceed in the hiring process through the diversity lens, then you’re really expanding what your agency can do.

“And by default, you’re being forced to re-engineer your culture, your tools, and your approach of engaging customers because you’ve done it to attract new talent in the first place.”

The Bottom Line

Data, technology, reimagined distribution, and hiring are among the drivers pushing the insurance industry to a strong and steady future. It’s an exciting time for agents and consumers alike, and educating yourself about what’s coming is vital to not only staying in the game, but winning.

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