Rethinking Personal Lines Strategies with Personal Lines Experts

Relying on rate increases won't be a sustainable strategy.

The personal lines market is undergoing significant change. Complex factors like rising costs, strained regulatory relationships, and customer education challenges has many carriers rethinking their PL approaches. I recently hosted the Personal Lines Roundtable at our Insurance CIO Council Conference in Boston, where insurance leaders grappled with fundamental questions about the future of personal lines in today’s rapidly shifting environment.

One perspective shared was that solely relying on rate increases is not likely to be a sustainable strategy in the long-term. A participant pointed to Amazon as a parallel—a company that has undertaken complete transformation of their product/distribution models from their origins as an online book seller. There is an opportunity, perhaps even a necessity, for personal lines transformation beyond just rate revisions.

Key bottlenecks identified were rate filing and legacy technology constraints that slow carriers’ ability to nimbly adapt products and pricing. A recent study with our CIO Council found these technology processes and antiquated systems to be major impediments for making product changes. This often applies to true-new products as well, although some smaller carriers can be more agile by using tools like Excel and other companies can compensate for legacy technology with adept and experienced IT teams.

However, these issues go beyond just the technologies themselves. Cultural challenges like lack of cross-team communication, transparency on existing systems’ logic, and getting necessary business SMEs involved compound the problems. Many carriers are paying down “technical debt” to help, but doing so requires dedicating resources and navigating change management hurdles.

Looking ahead, AI and automation were discussed as potential aids for efficiency, but a level of pragmatism remains. Most see AI’s value in the three-to-five-year horizon being focused on insights, augmenting processes like call centers, and enhancing search capabilities rather than being a primary decision engine. There are also strategic questions around where to automate versus preserving human touch for sales opportunities.

The resounding message was that personal lines pricing can’t be looked at in a vacuum. Carriers need to holistically reevaluate their personal lines business – from the underlying technologies and processes, to the talent and culture required, to where AI and automation can truly move the needle. With the right vision and determination to transform, great opportunities await for those who can crack the code.

Read more about current trends in personal lines in our Business and Technology Trends 2024: Personal Lines report–or, if you’d prefer a one-on-one conversation, don’t hesitate to reach out to me directly.