Elevate your commercial business

Competitive pressures in commercial insurance are expected to increase in the coming years. The reasons for this may vary, including market volatility, economic growth, or the ongoing hard market conditions, but insurers will eventually be forced to evolve through digital transformation.

Despite commercial lines (CL) being more complex than personal lines, data standard adoption will bring tremendous value industry-wide. Through the implementation of CSIO’s Data Standards, insurers can offer customers the benefits of real-time quoting and automation.

Data standards for commercial lines have been around for a long time, but  the benefits have not been fully realized due to barriers such as software incompatibilities and legacy systems that can’t properly support them. Standards are fundamental to compatibility, helping partners to connect using the same “language.” This allows systems to talk to one another more efficiently and accurately by exchanging data in a structured format along the insurance value-chain.

Insurers consistently list five reasons why they choose to move towards CL real-time quoting.

Improve the customer experience

A top priority for insurers is to ensure the customer journey is a frictionless, end-to-end experience. A key success factor is real-time quoting ability, allowing broker partners to support customers in the way they expect. Quotes would take only a matter of seconds, allowing customers to make informed decisions and obtain insurance much faster.

Under this scenario, CL quoting would follow the same process as personal lines, providing a consistent experience for the customer; they’ll know exactly what to expect.

Research from the Conference Board of Canada found that 85% of brokers expect CL data standards to lead to faster turnaround times for customer quotes and renewals. Brokers would then devote more time to client retention, which is essential to secure business portfolios.

Grow business portfolio

According to McKinsey, the small commercial insurance market accounts for one-third of the commercial lines market; it is the fastest-growing segment of the commercial P&C marketplace. In fact, Stats Canada reports that 98% of Canadian businesses are small businesses, making it an attractive opportunity for insurers to gain market share.

The small business segment, generally comprised of profitable businesses with lower loss ratios, has been traditionally served through brokers. It demands a relatively high-touch and low-cost model to cater to small business clients’ needs. To find success in this space, insurers are leveraging CSIO standards and real-time functionality to streamline the process to win more business.

Automate underwriting

Typically a small business insurance application takes two or three days to process, although some policies take five days or more, according to Conference Board of Canada research. By implementing real-time quoting, insurers can automate this process and slash processing time down to seconds. The end result is a greater number of digitized commercial insurance transactions, leading to higher overall productivity.

Not only will insurers realize efficiencies with savings in underwriting and general administrative costs, but real-time quoting provides a competitive advantage.  It frees up time for underwriters to assess and evaluate complex risks, as well as improve underwriting results. Also, it creates more time to provide technical advice, recommendations, and mentoring.

Enhance data quality

The ability to make informed business decisions using data and analytics is paramount. Through standards and real-time quoting, more sophisticated data capture improves an insurer’s ability to acquire and select risk, as well as to underwrite and price policies. To capture value from a large pool of data, standards and structures are required to interpret the data effectively.

Real-time transactions force partners to send structured data, enhancing the quality of the information collected. Using this data, insurers can then better identify trends and segment markets; create better rating models to boost profitability; and provide new products that better meet customer needs.

Using the XML Data Standards, CSIO’s Commercial Lines Working Group established the minimum data set of 43 elements required to quote small commercial business, along with the additional questions for contractors, retail, and professional services risk. With a clearer understanding of their risks, insurers can gather more data while asking fewer questions, creating a positive customer experience.

Build stronger partnerships

Business partner relationships should be strategic alliances between entities with a common interest in working collaboratively and building long-term relationships. The Conference Board of Canada research shows that 91% of brokers are more likely to work with insurers that have implemented data standards.

Leveraging the standards to build real-time capabilities means shorter development time for both insurers and vendors, reducing system maintenance costs in the future. Real-time functionality strengthens the relationships and makes possible new integrations, which vendors can then offer to broker clients. Ultimately, insurers that focus on fostering these positive relationships with brokers will increase trust, transparency, and drive strong business success.

Commercial lines are at a tipping point. Customer expectations, new competitors and a changing set of challenges are transforming the insurance industry. To win new business, both insurers and brokers must find ways to become more efficient in their operations. With standards, and ultimately real-time quoting functionality, commercial insurance providers have the opportunity to become more customer-centric, lower costs, and achieve growth.

Feature image via iStock.com/kuppa_rock

Catherine Smola is president and CEO of the Centre for Study of Insurance Operations (CSIO). Email standards@csio.com with any questions about CSIO’s Commercial Line Data Standards. The CSIO XML Standard is licensed to CSIO by ACORD (Association for Cooperative Operations Research and Development).