Is Specialty Insurance Ready for Innovation and Disruption?

Is Specialty Insurance Ready for Innovation and Disruption?

September 21, 2022 |

For most people, it’s customary to have insurance to protect valuable assets and interests. Businesses, cars, homes are just a few of the many examples that come to mind. But to what extent do people and companies go to protect their investments? With examples like multiple birth insurance, and lottery insurance, the answer is quite far, and is the foundational basis for what is called specialty coverage.

What is specialty insurance?

Stripped down to the most basic level, specialty insurance is coverage following the specialization of an insured, a product, or the coverage provided. Typically, specialty coverage is non-admitted business. It includes everything from the very complex coverage of ocean marine to the more common form examples of aviation or oil rigs. Even special events, like half-court basketball contests, may garner insurance policies.

In addition, many excess things and surplus usually fall into the specialty category. Generally speaking, specialty claims are more complex. While each claim may be unique, specialty lines usually have intricate cases because the claims process has several specialized parties involved. These parties can be involved in all manner of ways – from investigating the circumstances of the claim, confirmation of coverage, claim settlement, or further inspections or adjustments.

While these instances are normal procedures for all claims, the nature of specialty lines of insurance is more complicated and specialized – and presents an opportunity for innovation.

The more complex, the more time is needed

Specialty claims tend to run longer than their traditional counterparts in the P&C space. This is because the claim file has significantly more data attached to it, making specialty unique. Moreover, in the event of a payout or loss, the nature of the loss can determine the significance of that payout/loss.

Traditionally, adjusting and fulfilling a claim is a very manual process due to the nature of specialty insurance. This makes sense – putting the best, most experienced people in place to handle what has proven to be nuanced and specific coverage. However, the industry is realizing more and more that automation can speed up a great many processes.

Specialty is an enterprise on the precipice of real innovation in this sense – data collection, changing sources of required documentation and information, prefill, and rethinking workflows. This innovation can remove the time-consuming nature of many data-driven processes, and leave the experienced, specialized adjusters to handle the complexities of high-touch claims or individual policies.

The nature of specialty lines of insurance is more complicated and specialized – and presents an opportunity for innovation.

What does that look like for an insurer?

What we see today is that carriers are revisiting how they track, manage, and engage with reinsurance and finding new ways to feed this part of the claim into a consolidated process. Specialty insurers are finding cost savings and time by mimicking common user experiences and standardized workflows when it comes to engaging with reinsurance, instead of working in silos.

What is worth noting is that this all translates to more data and more complications. Generally, if a claim needs more information, it takes longer to resolve, and since specialty claims often have more data attached to them, they can be lengthier propositions – something both insurers and their insureds should keep in mind.

From a technology perspective, however, you’ll find that carriers run the same platform for very basic personal auto as they do for all commercial, personal and specialty lines. The same transactions are supported and available. However, this is where the similarities end with specialty since the coverage type dictates how particular workflows are built out.

Adjusters for specialty insurance

Balance becomes the name of the game. It’s about encouraging the right behaviors in a new digitally-enabled specialty claims world – one where innovation and transformation are proving their worth – while managing this experienced workforce.

While specialty claims are being flooded by technology in the form of simplifying workflows, data capture, straight-through processing where appropriate, etc., giving smart and experienced adjusters room to operate will increase the gains to be had.

It is imperative to give these individuals latitude. When given the space, innovation and technology will supplement two specific behaviors – automating time-sensitive and repetitive tasks to speed up manual processes and paving the way for a fresh and ambitious workforce that will continue to push the specialty insurance line towards a successful future.

The moral here is that systems and processes must be designed for workflows as well as different types of coverage, more so than any other line. The keyword is balance.

Innovation opportunities

What standard P&C carriers learned many years ago was that even the most basic digital claim record (supported by the ability to share, track and report with new technology) achieved wonders for businesses.

Smart people and organizations had the vision in place – and they turned to technology to help implement and scale this vision. What data sets were needed? How can we digitize the process piece by piece to ensure we’re serving our customers at each touchpoint along the way? How can we grow with our business? What does tomorrow look like?

Innovators in specialty lines are doing just that, and the best part is that they’re living with the systems that serve as the backbone for innovation and constant evolutionary change. This is the behavior innovative industries have; they don’t buy technology and leave it untouched because that thinking is antiquated.

Looking ahead

The speed at which disruption is taking place may uncover more opportunities in the marketplace, the unforeseen circumstances, and uncertainties of the current climate notwithstanding.

Opportunity goes hand-in-hand with disruption. Admittedly, finding those opportunities may be difficult, but the journey will be a fascinating one as the specialty claims world continues to evolve.