Andrew How, Senior Sales Director, explores the innovative solutions that are streamlining specialty commercial insurance product development in 2023 and beyond. Read the first part of this blog here.
In the ever-evolving insurance industry, specialty commercial lines have always been a dynamic segment, tailoring products to sectors and businesses with unique coverage needs of specialised industries or higher-risk activities. From cyber risks and financial lines, management and professional liability, to product liability, marine insurance, art, event and entertainment coverage, the global specialty commercial insurance market has witnessed substantial growth in recent years.
Unlike standard commercial insurance policies, which provide general coverage for common risks, specialty commercial lines insurance offers tailored coverage for specific industries or business activities that may require more specialised underwriting expertise to assess the unique risks involved.
It is a critical imperative for specialty insurers to adapt to emerging trends and leverage innovative solutions to address pain points in insurance product development and speed to market, which historically has been slower compared to other sectors of insurance.
Specialty insurance market growth and evolving risks
The specialty insurance market has experienced remarkable growth, with the market size reaching US$ 86.6 billion in 2022. Projections indicate a continued upward trajectory, with the market expected to reach US$ 140.6 billion by 2028, exhibiting a compound annual growth rate (CAGR) of 8.1% during 2023-2028.
Despite the topline growth projections, insurers face the challenge of balancing pricing, maintaining commercial terms, and ensuring product relevance and affordability against headwinds of inflation, rising interest rates, and political uncertainties. Insurers must strike a careful balance to meet customer demands while maintaining profitability.
The emphasis on affordability and efficiency necessitates greater cost efficiencies in distribution and operations. Insurers are driven to innovate and personalise coverages to eliminate unnecessary costs. Moreover, the risk of underinsurance poses a concern, necessitating the adjustment of insured values to ensure adequate coverage for consumers and mitigate risk for insurers.
Digital innovation: driving business forward
Amidst these challenges, digital innovation emerges as a key driver for insurers in complex product spaces like specialty insurance. To thrive, insurers need to deploy advanced technological solutions that empower them with the tools and capabilities needed to bring products to market quickly, efficiently underwrite and price policies, and personalise coverages.
Here are four ways specialty insurers are unlocking the potential of specialty commercial lines insurance:
- Flexibility for Multi-Line Writers: With the diverse range of businesses across specialty commercial lines segments, flexibility in product development is critical. Modern policy and rating engines offer the ability to cater to various businesses’ unique needs, ensuring efficient underwriting and pricing across different specialty lines.
- Low-Code Development: The ability to make product changes quickly and easily, even in complex specialty commercial lines is crucial in today’s rapidly evolving market. Low-code development allows insurers to adapt to changing requirements and incorporate new coverages or adjust existing ones with minimal effort.
- Inheritance Model: Implementing an “inheritance model” allows insurers to set up base products for commercial lines and regional segments. These base products act as reusable components, enabling efficient product development and customisation for different hierarchies.
- Open Ecosystem: An open ecosystem facilitates a seamless purchasing experience for businesses by pre-filling data. This could include information about a commercial property, a company’s cybersecurity measures, and more – integrating data from various sources to power better risk understanding and more accurate underwriting.
Duck Creek Technologies as the leading provider of insurance software solutions, supports some of the world’s most prominent commercial insurers. Our rating engine, policy administration system, and industry content library are specifically designed to address the challenges faced by commercial insurers. By leveraging our robust and flexible on-demand SaaS platform, insurers can achieve key business objectives such as accelerated product launches, enhanced claims management, and streamlined billing processes.
