These four technologies belong in every E&S insurer’s tech stack

Manual processes don’t cut it for E&S insurers if they want to remain competitive in today’s growing market. Traditional approaches may have been sufficient for lower transaction volumes, but as the market continues to expand, better use of technology is an imperative.

In 2023, the surplus lines market exceeded $100bn in direct written premium for the first time, according to a report from AM Best and the Wholesale & Specialty Insurance Association (WSIA).

Although the market is growing, there is the same amount of capacity. E&S insurers must quickly identify new risk areas, create products and bring them to market faster than their competitors. Having a strong technology foundation can speed up product creation and improve customer service. For insurers looking to digitise their operations, here are four technologies that should be in every tech stack.

1. Data-centric underwriting workbench

Traditionally, E&S insurers underwrote policies manually, a time-consuming process that required pulling information from a variety of sources. Underwriting platforms utilising generative AI can scan structured and unstructured data sources to pull in information and answer risk questions in order to automate risk assessment. With these solutions, not only can E&S insurers improve underwriting efficiency, but they can also boost accuracy and ensure it is a risk they want to write.

2. Low- or no-code business process management tools

From quoting to claims to customer service, business process management (BPM) tools can streamline workflows, increase transparency and fuel accurate decision making. Processes throughout the insurance lifecycle are disjointed. Internally, this leads to redundant and repetitive tasks. Externally, it diminishes customer satisfaction as clients experience elongated service times. Incorporating low- or no-code BPM tools help insurers create competitive products, provide customised service, enhance market reach and improve coordination with their distribution networks.

BPM solutions can be used to upgrade a variety of processes. They can improve third-party coordination integrating data from vendor and regulatory systems. They can manage renewals, speed up quoting and help maintain steady communication across different channels. BPMs with low- or no-code functionality are adaptable and able to adjust quickly if the E&S insurer changes its product offerings due to market shifts.

3. API-driven integration system

An integration system is the backbone for a digitised E&S insurance operation. There is no single magic solution that will solve all challenges within an insurer’s operations. It requires the incorporation of various tools specialised to undertake certain tasks. An integration system enables the insurer to more easily connect and share data not only with solutions supporting their internal operations but also with partners such as brokers and reinsurers.

Using APIs, E&S insurers can share policyholder information with distribution partners and brokers to reduce the amount of back and forth. They can quickly distribute new products to their market, and expedite the claims process. They can connect to other data platforms to pull in information and automate risk assessment.

4. Reinsurance technology

With new products and market growth, E&S insurers should have a systemised way to manage their reinsurance relationships. A reinsurance platform organises contracts and automates a number of internal processes. They keep track of details related to contracts such as treaties, claims, incidents and accounting and financial data. They also manage contracts throughout the lifecycle from underwriting to endorsements and renewals.

With reinsurance technology, E&S insurers can pinpoint claims that are covered by reinsurance and automate processes that were traditionally handled with spreadsheets, legacy systems and antiquated databases.

Overcoming the fear of transformation failure

E&S insurers by nature have been incredibly risk averse. This has led them to be slower than others in the industry to embrace digital transformation. One way to gain more confidence in technology is to try before buying. A number of providers have pre-configured and pre-built interfaces and workflows. Make sure the provider offers a sandbox for the business team to play in with pre-configured templates, forms and workflows. Ask if the provider will do a proof of concept allowing the business team to provide scenarios that the vendor will run through the system. By being able to test the solution, insurers can reduce the risk of it not working within their operation.

For more than a half decade, there has been considerable E&S market growth. Manual processes cannot keep up with the growing demand. As competition continues to increase from legacy carriers capitalising on the market opportunity and from new entrants entering the space, E&S insurers will need to embrace technology to bring new products to market faster and provide a better customer experience.

By Praveen Pachaury, senior vice president, head of technology and digital at Xceedance

Insurance