When the pandemic hit in 2020, many property and casualty commercial insurers had to pause, stabilize and reprioritize their digital transformation plans amid lower business volumes, economic lockdowns and an uncertain financial environment. But that all changed in 2021 as commercial insurers pressed the pedal to the metal. Now, a new study from SMA indicates that commercial insurers will continue to advance with their transformation strategies in 2022. However, their focus will look a little different than it did a year ago.
SMA's recent research report, "2022 Strategic Initiatives: P&C Commercial Lines," features market insights from an annual survey of insurance executives about the state of their strategic plans. Over the past two years, the insurance industry has shifted its priorities in response to changing consumer demands, altered business patterns and the workforce revolution. This year, 100% of commercial lines carriers are at some stage in their digital transformations. But, as insurers move past the plans implemented during COVID-19, many realize that they are not as far along in their transformations as they initially believed, and there is still a significant opportunity to transform their businesses.
When looking at differences between insurers focused on small commercial versus mid/large commercial lines, there is significant variance in the business drivers pushing technology investments forward in 2022. In the small commercial segment, growing existing lines, markets and geographies is the number one driver this year. As insurtechs and new entrants increase market competition, small commercial insurers are more likely to focus on growth than their mid-market/large commercial peers. Increased competition is also why more than half of small commercial insurers are also focusing on cost containment.
See also: Climate Change and Product Liability
On the other hand, most mid-market/large commercial insurers are aiming for business optimization and transformation with their technology investments to reduce complex manual processes. Currently, there is a wealth of opportunity for them to automate operations and leverage insights for greater efficiency.
What is clear in 2022 is that commercial insurers seem to have solid road maps for their digital transformation, even if many are still in the early phases. As the year unfolds, technology investments will be necessary to build a platform for innovation and growth. Rethinking talent strategies will also be critical now that employees' expectations have forever changed due to the pandemic. A major change is underway, driven by key strategic initiatives evolving traditional and transformational aspects of the business, and insurers will need to be bold and embrace change to be successful in 2022 and beyond.
For more information on specific strategic initiatives of commercial lines insurers, including the strategies of the small commercial and mid/large markets, read SMA's recently published research report, "2022 Strategic Initiatives: P&C Commercial Lines."
