The start of a new year might feel like an arbitrary time for small insurers to modernize their technology stacks, but let’s be honest – setting a timeline is the hardest yet most important step.
Why bother modernizing? For small insurers, long overdue upgrades to agent and policy holder experiences, claim management systems and billing systems have the potential to level the playing field against the industry’s major players, attract (and keep) top talent, retain policyholders, grow your book and so much more.
So why not use the turn of the calendar to make it happen? Here’s a simple framework to help smaller insurers level up by upgrading their tech stack in 2024.
Establish a Budget
A big part of making tech upgrades is getting a realistic sense of what it’s going to cost. While this article won’t give you a firm number (or even a range), it will provide you with a recommended shift in mindset:
Instead of thinking about tech upgrades as cost centers, think of them as savings.
What is the cost of losing a customer to a carrier who’s tech and flexibility operates like all of the other parts of their life (online portals, electronic payments, information at their fingertips whenever they want it). What’s the cost of an agent choosing your competitor 80% of the time because they are easier to work with? What’s the cost of manual work done in your office every month that could be automated? Many small insurers pay 4-5% of direct written premiums (DWPs) because existing vendors aren’t focused on them. Somewhere in the 1-2% is the typical budget for larger insurers. You’ve got to start by deciding what sort of investment you’re willing to make.
Prioritize and Plan
One of the best ways to go about upgrading your tech stack is to start with objectives and then work backwards. What are your biggest pain points? Time wasters? Bottlenecks? Vulnerabilities? Armed with those objectives, you can identify the tools and tech that are currently powering (or not powering) them. Now you know where you need upgrading.
Pro Tip: Be honest with yourself about what’s a need and what’s a want.
When embarking on a journey to modernization, know that there will be a degree of project management required on your end. Engage team members that have a deep understanding of the company, the current technology setup and the capacity to essentially serve as the project lead. It’s also important to recognize that how quickly the project is completed is determined very much in part by your team’s ability to manage it. Prioritize responsiveness, access, and collaboration and implementation will meet expectations.
Also, decide on needs vs wants. What do I have to have to justify the project vs extras.
Generally speaking, the implementation of a typical tech upgrade project for small insurers runs six to 12 months. Prior to implementation, though, anticipate anywhere from two to six months worth of vendor evaluations, decision-making and contract negotiations – even more of a reason to get started in the new year!
Get in Front of Hurdles
Change is rarely smooth. There will be bumps in the road of modernization. Things like data migration, vendor coordination and staff learning curves. The key, however, is to acknowledge these expected hurdles and develop mitigation plans. For example, if you know that your staff isn’t going to love learning a new system, make them a part of the process from the start. Open up dialog for questions. Distribute training and onboarding materials.
Source a Knowledgeable Partner
For small insurers that haven’t paid attention to their technology systems in a while, figuring out where to start can be daunting. Engaging the support of a knowledgeable partner that’s operating on the frontlines of insurance technology (or insurtech, as it’s known in the biz) can help you ramp up your knowledge and inform the decision-making process.
Small insurers have two primary choices here. They can work with a paid consultant who can make recommendations or they can engage a solutions provider that has proprietary software that they can easily customize to individual needs and requirements.
Spoiler: We’re the latter. At Trailblazer, we’ve built a range of modular products designed specifically for small insurers that can be utilized as a full suite, a la carte, or in lockstep with existing infrastructure. We’re a group of insurance veterans turned insurtech innovators, committed to democratizing access to modern, game-changing technology that small insurance companies deserve. If that sounds interesting, we’re here to help you make a plan to make 2024 the year your company modernizes in a major way.