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Will technology help smaller insurers compete more effectively?

(or does it just widen the gap between large and small carriers)

Doesn’t new technology help all insurers become more efficient; better meet their policy holder’s needs; integrate with brokers; change the way business is performed?

The answer is — Yes, it does, but when larger insurers have access to the same technology, and have deeper resources, are they better able to use technology to gain competitive advantage? Does this market of rapid technology represent a disadvantage for smaller carriers?

Recent research and analyst’s findings does show that technology is producing winners and losers. The winners are gaining market share, improving profitability, cutting costs, and in some cases disrupting the industry with technology, while the losers are floundering.

As a vendor that deals with many smaller insurers, we constantly monitor whether their investments (often with Hubio products and services) are helping them compete and prevent them from losing market share and profitability.

Hubio has a wealth of anecdotal evidence that tells us that smaller insurers that spend wisely, and focus on their strengths,  can compete and can use technology to join, stay with, or lead the ranks of the winners.


Let’s look at FIVE common ways this is the case.


The business needs to drive transformation – not technology drive the business. Technology is needed to support these business drivers. Sounds straight forward, but sometimes it is difficult to put into practice, especially when vendors are selling stock solutions, that they claim can fit all end-uses you may be thinking of, and are cost-effective because of this re-use.


Smaller insurers looking to successfully compete, need to utilize advantages such as a strong local presence, a strong distribution channel, and the concept of taking care of others that share similar risks – a peer-to-peer relationship, as a  market differentiator – and make technology investments that support, and extend this action. In the case of mutual insurers, many of whom are also smaller in total premiums, they are relevant to many policy holders because of not just their local presence, but also that they provide their policy holders with ‘ownership’ in the company, not just the cost of insurance.


As a result, technology investments that support these goals, and support the creation of regional, market specific products and services can be a differentiator. Technology that enables these products and services to be modified as the market changes may provide higher value than technology investments made to match large insurers strengths, for instance major data analytics investments.


Technology that makes customer’s lives easier and better will help smaller insurers. Yes, it helps large insurers too, but when your core strength is your understanding of local, regional customers, such as entrepreneurial or smaller businesses – not multinationals – then investments to facilitate this make business sense.

Technology designed to help serve these clients makes more sense than chasing the large accounts that are out-of-reach. Technology to enable small businesses to view their accounts online, access a self-serve portal, or link to a broker for advice and information can be beneficial.  So are technology investments to more easily create products for this segment. Such technology enables these clients to receive features and prices to meet their needs.



Use technology to facilitate a focus on product niches that are underserved, that are already defensible from large insurers, that represent areas of unique, specialized knowledge. Technology investments that extend and defend this position make business sense.  Hubio works with several insurers for whom Farm coverages fit this description. These insurers have a large enough farm customer base that requires unique products, coverages, and prices. Technology that aids this differentiation provides competitive advantage.

As one of our customers recently stated to me, for which I paraphrase – Farm insurance is difficult to automate and move online, but that is not a negative for us. In fact, this difficulty is what will provide us with competitive advantage (combined with several other factors).


Make technology investments that connect brokers with insurers, enabling stronger customer inter-action.  As with all investments this helps both small and large insurers. However, smaller insurers are disproportionately represented by brokers, and need their broker channel to allow them entry into more complex product lines. Competitive advantage for smaller insurers often arises as they  link brokers and underwriters for commercial packaged products, or commercial specialty products.  This is part of a strong digital strategy.

Many insurers feel this area is “already done” – uploads, downloads, portals – we’ve done that. But that is not the case. Digital investments are ongoing, as policyholder and broker expectations constantly change, as do those of internal underwriters, and as does the need to integrate the customer experience with internal operations.

User interfaces in which broker, underwriter, and producer can interact to meet policy-holder needs are of high-value. Technology offering a 360-degree view of the client, and supported by links to third-party information, is available to smaller insurers, and can be built to reflect their unique services. Those adopting a ‘me-too’ strategy to replicate larger insurers may struggle with this approach, but those seeking unique alternatives will gain. For example, providing download services to brokers puts an insurer as one-of-the-pack, whereas creating a digital storefront is a differentiator.

Does everyone have this? Not even close. Those that have made investments, have often done so within the commodity lines of business such as personal lines auto, in which large multinational carriers, through economies of scale, already have cost advantages.

Higher value and return will come from investments to integrate more complex forms of insurance. For instance, a millennial with an automobile can shop & purchase insurance online. Whereas one with an automobile and a boat, or an ATV, or with a unique vehicle, maybe with a stereo system worth more than the vehicle, will need interaction. But that interaction better be a positive experience. Not – “let me get back to you”, rather a “let’s see what happens to your price with a range of services, coverages and deductibles”.

For instance, Unica Insurance, a subsidiary of La Capitale group, and a long-time Hubio customer, is a strong backer of their broker channel, and is investing to strengthen their local presence, and their understanding of market dynamics. Dave Smiley the President of Unica, told us that Unica brokers get involved in more “complex” sales, where advice and servicing are necessary. Unica is investing in technology to help their underwriters and brokers deal with these complex situations. They are using technology to strengthen and support their competitive advantage. They are focused on where their team adds value, and are using in-house underwriting experts to interact electronically, and in-person with broker and customers – to provide an enhanced customer experience.



Use technology to enhance flexibility, as smaller insurers move faster than larger multinational competitors. Even with technology, large multinational insurers are still constrained by bureaucracy, which smaller insurers do not face.

If legacy systems slow this process, and cannot be replaced, there are new technologies to enhance these older systems.  This includes newer UI’s, adding flexible editing, underwriting rules at the point of sale, the ability to review multiple scenarios for the customer, and complete what-if-analysis.

For those replacing legacy systems with new core systems, such as with the Guidewire suite of solutions, there may still be a need for localized features and functionality. That is why Guidewire introduced a partner program, of which Hubio is a partner in building Accelerators, that complement these new systems.



While larger carriers may opt to build in-house, most smaller insurers will need to work with third-party vendors.Which option is best – Build in house, or use third-party vendors? …well that’s a topic for another blog…