5 Digital Disruptions Small Insurers Need to Navigate

5 Digital Disruptions Small Insurers Need to Navigate

5 Digital Disruptions Small Insurers Need to Navigate

In 2017, insurance companies and related enterprises accounted for over $600 billion, or 3.1% of the gross domestic product of the U.S., according to the Bureau of Economic Analysis. In 2018, insurance carriers employed over 1.5 million people.

Despite the substantial contribution the insurance industry makes to the U.S. economy, it has been slow to adapt to the modern technological advances that have brought unprecedented levels of productivity to other financial services.

From advanced data analytics tools to blockchain technology, digital products are changing the insurance business, and not just with the emerging Insurtech companies. Some of the larger insurance carriers have invested heavily in modernizing their operations. However, small insurers need to navigate these developments effectively if they hope to survive and thrive in the evolving insurance industry.

Some of the biggest disruptions include advanced data analytics tools, artificial intelligence, online sales technology, blockchain technology, and modern IT infrastructures. Innovation will be crucial to the future success of all competitors in the insurance industry. In this article, we’ll tackle five of the most important digital disruptions in the industry today:

Advanced Data Analytics

Data analytics has always been the insurance industry’s greatest weapon. For hundreds of years, actuaries have churned out mathematical models to predict risk and estimate loss. Insurance companies collect huge amounts of data from their customers. However, while some established insurance companies have made huge investments in advanced data analytics methods, small insurance carriers have lagged behind.

Small insurers need to learn how to integrate advanced data analytics methods into their workflows to aid data-driven decision-making. Modern data analytics tools can help small insurers mine their databases to create more customer-centric products and better-informed pricing models.

Artificial Intelligence

With Artificial Intelligence, you can reliably automate repetitive tasks, streamlining your internal processes. AI goes hand-in-hand with data analytics to make data mining easier than ever before. As your AI algorithms become more advanced, they will be able to predict customer behavior with greater accuracy and design customized products to meet varying customer needs.

Customization is a huge factor in customer decision-making. As larger insurers find ways to reach customers on a more personal level, small insurers will need to take advantage of AI to keep up.

Online Sales

The online sales arena is especially tricky for insurance carriers. However, a reimagined approach to insurance sales can change the game for many small insurance carriers. Traditionally, insurance sales have been conducted by agents and brokers. While many insurance carriers now offer online quotes and product comparisons, customers are still being directed to agents and brokers for the final sale.

Small insurers can take greater control of the customer experience by circumventing the broker. By simply switching from agents in physical storefronts to web-based intermediaries, small insurers can see significant savings in overhead expenses. Many large insurers are moving towards end-to-end mobile platforms that provide one-stop shopping for customers. Small insurers should follow suit.


Blockchain is a distributed ledger technology (DLT) in which transactions and records can be executed from start to finish without the control of a central entity. Blockchain technology is widely known for its most popular application — cryptocurrency.

However, blockchain technology’s capabilities go far beyond cryptocurrency. This technology provides a level of trust, transparency, and security that was previously unheard of. Benefits include:

  1. More transparent and streamlined claims processing
  2. More secure and efficient payment systems
  3. Smart contracts
  4. Streamlined subrogation
  5. More sophisticated data-driven product offerings for consumers
  6. More efficient and secure payments between insurers and third parties

Modern IT Infrastructure

Productivity and communications tools have come a long way over the past few years. There is an endless amount of applications for improving communications and optimizing workflows. One of the easiest ways to overhaul your small insurance business is by adopting a modern IT infrastructure to match the modern industry.

Cyber-security threats are growing pain points for all financial services companies, and insurance companies are no exception. With Europe’s implementation of the General Data Protection Regulation (GDPR), the penalties for mishandling customer data are higher than they have ever been. Updating IT infrastructure to meet modern security and productivity demands is essential for small insurance companies.

Where to Start

Staying on the cutting edge requires a high-quality team. Insurance companies often struggle to recruit the best and brightest from universities because they have been slow to adapt to the new industry norms.

The companies that attract top talent understand that their pay and benefits packages need to meet the wants and needs of a new generation. There are several ways small insurers can recruit more young graduates to help usher them into the new era:

Offer internships 

Offering well-paid internships is a great way to attract students to your company. Students often determine their initial career paths based on their internship experiences. You can engage your student interns with your company’s business goals by assigning them meaningful work that will benefit your organization.

Go Digital

The modern job search occurs largely online. Digital tools and platforms are the best way to reach new grads. Get your job openings posted on relevant job boards for maximum visibility.

Overhaul Culture

It’s no secret that the modern workplace is far different from your grandfather’s. High-performing companies looking to recruit top candidates must offer benefits that resonate with a new generation of workers. In some ways, top college talent must be treated as a class of customer – you will need to find out what they value and adjust your organization’s culture accordingly.

Why This Matters For You

The technological disruptions impacting the insurance industry will soon become commonplace. While large insurance providers have the benefit of scale and money to help their transition to the digital space, small insurers must keep pace with much smaller budgets and staffs.

Still, these technological disruptions cannot be ignored. Success will depend on providing an outstanding user experience for customers while offering products that suit modern life.

How CHSI Can Help

CHSI was founded to provide small insurers with the technological solutions they need to thrive in the modern marketplace. Our insurance management software was built by insurance program administrators for insurance program administrators. We speak your language and understand your business.

With CHSI Connections, you won’t just get an outstanding software product — you’ll get a world-class support team. CHSI can help you navigate the recent innovations in the insurance industry to find solutions that work for you. Schedule a demo today!