A recent research report from SMA describes the business and technical capabilities any insurance company needs to develop and deploy personalized products and gain a valuable competitive edge.
It’s a topic we’ve addressed in previous blogs, but traditionally, the insurance industry has been slow to adopt new technologies and business strategies, especially those related to rating and pricing.
Yet different times call for different measures. More specifically, insurance companies must now respond to changes they may not even have considered two years ago. For example, the entire industry is now facing increased competition – from new entrants as well as non-traditional players – and in addition, the COVID-19 pandemic led to new behaviors that affect risk and pricing even today.
All of this highlights the imperative need for insurers to implement the right technologies that will enable them to design highly personalized products, increase their time to market, and engage the most profitable market segment possible.
A recent research report from Strategy Meets Action (SMA), “Dynamic Product Actualization for P&C: Leveraging a Single Platform for Rating, Pricing, UBI, and Product Personalization,” takes a closer look at how insurers can achieve their rating, pricing, and personalization goals. More specifically, the report describes the business and technical capabilities insurers need internally, both to support workflows and processes, but also to give their organization the ideal technology solution.
SMA also describes how insurance technology leaders can now provide the breadth of product offerings and specialized functionality to help any insurance carrier improve processes, maximize the use of new advanced technologies, and develop truly personalized product bundles – quickly, easily, and profitably.
Let’s take a closer look at the business and technology capabilities SMA recommends in order to navigate a rapidly changing environment and drive profitable growth in the future.
SMA’s research highlights three critical business capabilities that must be in place for any insurance company to be able to develop and deploy personalized products.
These include key areas such as:
- Product and market strategy: Ideally, an insurer’s product and market strategy should include additional capabilities such as demand modeling, “what-if …” scenario analysis, continuous monitoring of early outcomes, and more. All of these are vital in helping rating and pricing teams make the best decisions possible to identify, target, and then retain, the most profitable market segments as possible.
- Product development: This is where advanced technologies come into play, such as powerful analytics, automation, and data models. These capabilities can significantly improve rating and pricing processes and results while also increasing the insurer’s speed-to-market times–critical to reaching customers before the competition.
- Production environments and deployment: This is where insurers use analytics-driven decision-making to combine rating, risk selection, personalization, and real-time engagement to deploy (and differentiate) their products in the market.
All of these business capabilities also require technology solutions that are based on advanced technical capabilities built specifically for the insurance industry.
In addition to the business requirements described above, insurance companies also need specific technologies. Ideally, this would consist of dynamic and composable solutions capable of delivering intelligent insurance operations. This is much more effective than attempting to add third-party point solutions to a company’s siloed and overly complex architecture – and positions insurers for much more success in the future.
These technical capabilities include:
- The infrastructure layer: The most effective solution should deliver powerful automation, advanced analytics, robust governance, scalability, security, and dynamic monitoring.
- The data layer: This capability serves as a foundational element that enables the building, use and management of machine learning/AI models and templates as well as other advanced technologies. By combining these best-in-class technologies with dynamic decisioning capabilities, insurers can continuously innovate their offerings.
- The UI layer: Any solution’s user interface should be as clean and as intuitive as possible. In insurance, this means enabling business users to quickly make changes and updates and drive the development of rating and pricing models.
These capabilities are required to support dynamic personalization and configuration changes for real-time product deployment.
The SMA report highlighted Earnix as a leading provider of proven solutions for rating, pricing, and product personalization, including UBI mobile telematics solutions for the automotive industry.
For example, a prominent North American mutual insurer offering both personal and commercial lines was seeking to decrease the time it took to deploy new rating and pricing models and provide flexibility to increase product personalization.
Prior to deploying the new solution, the manual handoffs and dependence on IT meant that even simple pricing changes took at least six weeks to deploy. Other more complex pricing changes could take four to six months from conception to deployment.
The company implemented Earnix’s pricing software (Price-it), a dynamic pricing solution that supports the full range of modeling, rating deployment, and pricing. It includes sophisticated simulations, data analytics and model management, and governance capabilities. Modeling changes are now being deployed in four days or less. In addition, the speed and flexibility have enabled the insurer to personalize offerings. The solution enables fast, dynamic pricing and personalization that the company considers to be a competitive game-changer.
Take the next step
Interested in learning more about Earnix solutions and how they can deliver the right combination of business and technology capabilities SMA recommends? Download the full report.