Why specialty insurance is ripe for innovation - PropertyCasualty360

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Yellow umbrella in a sea of black umbrellas.

For the majority, insurance is commonplace when it comes to protecting valuable interests and assets. Homes, cars, businesses — many examples come to mind.

But, how far do individuals and organizations go to protect any investments they can? Lottery insurance? Hole-in-one prize insurance? Multiple birth insurance? As these examples demonstrate, quite far, and it is the foundation underpinning what is known as specialty coverage.

What is it?

At its simplest level, specialty insurance is coverage that follows the specialization of a product, an insured, or the coverage provided.

Specialty coverage, typically, is non-admitted business. It can range from some of the more common forms of coverage, such as aviation or oil rigs, spanning to very complex ocean marine, for example. There are even insurance policies for special events such as half-court basketball giveaways, racehorses and more.

It’s also worth noting that many things excess and surplus tend to fall under this specialty category as well. As a generalization, specialty claims are more complex.

While every claim is unique, typically, there are very intricate cases within specialty lines. This is because there are several specialized parties involved throughout the claims process. These parties can be involved for settlement of the claim, investigation of what happened, confirmation of coverage, and even further for inspections or adjustments.

Sure, these are commonplace for all claims, but the nature of this work is usually more complicated and specialized — and it presents an opportunity ripe for innovation.

More complex often leads to more time

With more complication comes more time — specialty claims tend to be longer-running than their traditional P&C counterparts. This is because there tends to be a lot more data attached to the claim file.

Specialty is unique in this sense. Moreover, when there is a payout or loss, they can be very significant based on the nature of the loss.

Traditionally, the nature of specialty insurance has rendered adjusting and fulfilling a claim a very manual process. 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 finding more and more that a lot can be (and is being) automated to speed up this process.

Specialty is an industry on the cusp of true innovation in this sense — data collection, rethinking workflows, prefill, and changing sources of required information and documentation. This innovation can leave the experienced, specialized adjusters to handle the complexities of individual policies or high-touch claims, removing the time-consuming nature of many data-driven processes and, importantly, open the door for new waves of talent to succeed in the industry, marrying different types of backgrounds to those of the seasoned adjuster.

What does that look like for an insurer?

The process is quite similar in specialty lines. The concept of “specialty” doesn’t differ too much from a standard property and casualty claim. The framework is similar, too, with a refined element of data, sources and people. It’s the insurance carrier’s prerogative to find those details in a timely fashion so the right parties can be assigned to resolve the claim.

For insurers, that means assembling the right team. Again, this is what all claims go through, but specialty has different players. Often, you’ll find a lot of contracted third parties that play key roles in adjusting a claim as opposed to the in-house specialists you might find for more standard lines.

Workflows vary based on what’s discovered or what is being looked for, but again, in a more complex iteration of what would be considered standard. Many specialty insurers will start in the same place as their traditional counterparts, and then modify a standard workflow based on the intricacies of the coverage provided and the expertise required.

However, this is where things can get cumbersome from a time and cost standpoint.

The role of reinsurance

Very often, in specialty lines, much of the exposure is managed via reinsurance. While the overall claims investigation and adjustment process is governed centrally by the primary carrier, reinsurance is frequently involved. This means that insurers must understand when and how to involve reinsurance, toggling on and off between applications, review files and supplementing manual processes where possible.

What we see today is that carriers are revisiting how they track, manage, and engage with reinsurance (again, a plug for technology) and finding new ways to feed this part of the claim into a consolidated process. Rather than working in silos, specialty insurers are finding time and cost savings by mirroring common user experiences and standardized workflows when it comes to engaging with reinsurance.

Timely…translates to more data

What is worth noting is that this all translates to more data and more complications. Generally, the more information needed on a claim, the longer it will usually take to resolve. Specialty claims often have more data attached to them, which is why they can be lengthier propositions — something to keep in mind for both insurers and their insureds.

From a technology perspective, however, you’ll find that carriers run the same platform for very basic personal auto as they do for all personal, commercial and specialty lines. The same transactions are available and supported.

However, this is where there are differences with specialty since particular workflows are built out based on the coverage type.

Take aviation, for example. To fulfill a claim, it might require insights from accident investigators and investigators with very specific airframe or aircraft experience. There could also be a circumstance where there are longer running investigations due to the involvement of federal or state investigators, which changes the timeline for the other third parties involved in the process, meaning that events need to be incredibly well-coordinated and workflows need to be crisp.

Specialty adjusters

More so than in any other line of insurance, we know in the specialty world, you’ve got experienced, seasoned claims professionals and adjusters with very in-depth knowledge of the subject matter and how best to do their jobs.

It then becomes all about balance. It’s about managing this experienced workforce while encouraging the right behaviors in a new digitally-enabled specialty claims world — one where innovation and transformation are proving their worth.

While technology is flooding to specialty claims (taking the forms of data capture, simplifying workflows, straight-through processing where appropriate, etc.), there is still so much to be gained from giving experienced, seasoned, smart adjusters latitude.

Giving these individuals the space to operate is imperative, but we’re seeing areas where innovation and technology are supplementing those behaviors to do two things — speed up manual processes by automating repetitive and time-intensive tasks and pave the way for a new and upcoming workforce that will continue to push the specialty insurance line towards a successful future.

The moral here is that systems and processes must be tailored not only for different types of coverage but also for workflows and claims adjusters. More so than any other line. The keyword is balance.

Opportunities for innovation

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.

A look ahead…

Despite the uncertainties and unforeseen circumstances of the world today, there might be even more opportunities in the marketplace because of the speed at which disruption is taking place.

With disruption comes opportunity. Admittedly, it hard to know where those opportunities lie, but it will be interesting to find out as the world of specialty claims continues to transform.

Matt Foster ([email protected]) is the chief operating officer at Duck Creek Technologies.

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