Adapting to Uncertainty: Commercial Lines Insurers are Approaching Strategic Initiatives Differently

New SMA Blog by Mark Breading, Partner, Strategy Meets Action —

If you were to ask us to describe the transformational activity of commercial lines insurers in the past few years, acceleration would be the first word to come to mind. But in 2023, another word may be more accurate – adapting. Economic pressures, such as inflation, are driving commercial lines insurers to rethink their strategic initiatives and adapt to new priorities. Consider the results from a new SMA survey that shows that 12% of commercial lines insurer executives say their businesses are just in sustaining or surviving mode this year following a challenging 2022. The silver lining, however, is that insurers are inching back toward more aggressive strategies, with 30% indicating they are transforming. Although less aggressive than pre-pandemic levels, progress is underway.

These findings and more market insights are featured in SMA’s new research report, 2023 Strategic Initiatives: P&C Commercial Lines. The report includes the results from a survey of insurer executives about their strategic plans in fifteen initiatives (seven traditional and seven transformational), as well as the biggest drivers for technology investments this year. When analyzing the research from two lenses –trends in small commercial and mid/large commercial – SMA uncovered several major themes that define how commercial lines insurers are approaching strategic initiatives today, including:

Balance is vital: Commercial lines insurers are more focused on efficiency and growth via their current business model, resulting in some insurers decreasing investments in specific strategic initiatives.
Significant shifts in the workforce: Insurers across the industry adopted new workforce models during the pandemic, most prominently the hybrid model. In 2023, many are developing more comprehensive plans to address the continuing changes in the workforce and the evolution of roles.
Mid/large commercial insurers are more aggressive: SMA’s research suggests that the mid/large commercial segment has become more aggressive with investing and executing several strategic initiatives, whereas small commercial insurers have become more conservative. However, it’s important to note that mid/large commercial insurers overall are earlier in the transformation journeys than their small commercial peers.

As the commercial lines ecosystem continues to evolve, small and mid/large commercial insurers must balance internal strategic goals with changing policyholder and agent expectations, business optimization, and cost containment amid economic uncertainty. However, the commercial insurance industry is well-positioned for future success as long as companies continue to innovate and transform in a rapidly changing world.

For more information on the traditional and transformational strategic initiatives of commercial lines insurers, including the plans of the small commercial and mid/large markets, read SMA’s recently published research report, 2023 Strategic Initiatives: P&C Commercial Lines.

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About The Author

Mark Breading is known for his insights on the future of the insurance industry and innovative uses of technology. Mark consults with insurers and technology companies on forward-thinking strategies for success in the digital age. His inventive methodologies, fresh ideas, creative conceptualizations, and ability to incorporate InsurTech and transformational tech in business strategies are unparalleled. He also leads SMA’s research program, publishing 25-30 research reports per year and conducting various custom research projects for insurer and vendor clients. His thought leadership in the areas of InsurTech, transformational technologies, customer experience, and digital strategies has earned him a ranking of one of the “Top Global Influencers in InsurTech” by InsurTech News and Onalytica and a place in the ten finalists for the “Top Global IoT in Insurance Influencer Award.”

Before joining SMA in 2009, Mark spent 25 years with IBM in roles including the Global Insurance Strategist and Director of Global Financial Services Executive Conferences in addition to leadership roles in consulting and marketing. Mark co-developed IBM’s Account Based Marketing program and led the global project office to implement ABM across all industry verticals worldwide. Mark has held both technical and business roles in sales, consulting, marketing, and business strategy and has advised insurers around the world for almost 30 years.

About SMA, a ReSource Pro company

At Strategy Meets Action, our clients advance their strategic initiatives and accelerate their transformational journeys by leveraging our forward-thinking insights, deep vendor knowledge, and vast industry expertise. Strategy Meets Action is an advisory firm that works exclusively with insurers, MGAs, and vendors in the P&C market. For more information, visit www.strategymeetsaction.com.

About ReSource Pro

ReSource Pro brings integrated operational solutions to insurance organizations to improve growth, profitability and insurance outcomes. Headquartered in New York, ReSource Pro’s global service centers address client operational needs around the clock. Recognized as an industry thought leader and listed as one of Inc. 5000 Fastest Growing Private Companies annually since 2009, the company is renowned for its focus on innovation, service excellence and trusted partnerships, and its unique productivity platform for insurance operations. More than 5,000 ReSource Pro employees provide dedicated support to hundreds of insurance organizations, consistently achieving a +97% client retention rate over a decade. For more information, visit www.resourcepro.com.

SOURCE: Strategy Meets Action (SMA)