At the start of the New Year, Ernst & Young predicts technology, customer expectations and cyber risks will be the top three most impactful factors on the property-casualty market in 2017.

What’s the common thread among them? Efficiency. “Analytics and technology in general will be part of an agent’s value proposition—understanding what customers are needing, better understanding interactions across channels,” explains David Bassi, executive director at EY. “This is important as people continue focusing on how to drive efficiency.”

Here’s what you can expect in those areas this year.

Harnessing Technology

In 2017, expect InsurTech—the many segments of new technology that are disrupting the insurance space—to continue impacting the industry. “Give or take, 35% of emerging InsurTech providers have determined that the distribution of insurance products is broken, and they have created technology to change that,” says Karen Pauli, principal of Strategy Meets Action.

And although plenty of InsurTech startups fail, “there is so much change in the distribution space that today’s independent agents and brokers need to make choices about the tech they’re adopting,” Pauli says. “Technology is now a clear piece of the transaction.”

Jay Sarzen, senior p-c analyst at the Aite Group, points out that technology is also a critical component of agency-carrier interactions. This year, “technology is going to help agents align better with carriers. I think it’s critical not to waste time and energy submitting business that isn’t going to go anywhere,” he says.

Making agent-carrier interactions more efficient is especially important in commercial lines, Pauli explains: “It’s a hyper-competitive market, and because of that and globalization, the need to get quotes done in minutes to an hour vs. weeks or months is weighing on every insurer. Every agent is saying, ‘You’ve got to be able to get me quotes.’”

Sarzen believes this is the year when carriers are going to “throw up their hands and listen. Things are challenging for carriers right now because we’re in a low interest rate environment, so they’re going to be looking to tech to help them advance. Whether they’re looking for more innovation in underwriting or claims to deliver a better customer experience, carriers are going to start getting their heads around what tech innovations can do for them.”

Meeting Customer Expectations

When all is said and done, the goal of technology is “improving the customer experience and better meeting their needs,” Bassi notes.

The Aite Group’s Top 10 Trends in Insurance 2017 ranks insurers’ focus on improving customer experience in underwriting at No. 5. And while many in the industry are turning their noses up at Lemonade’s oversimplified approach to quoting, Pauli points out that efficiency is the company’s main appeal.

“Let’s say Lemonade doesn’t make it in the end. It will still change certain parts of the insurance process because people will understand it can be easier. They will expect certain things to be seamless that aren’t right now,” Pauli explains.

Sarzen agrees, adding that agents can use that concept as an opportunity to compete. “The savvier insurance agencies will embrace online portals to combat the other comparers of the world,” he suggests. “People shop on Amazon because it’s a one-click purchase. People are conditioned to that kind of shopping experience, but it doesn’t mean brick and mortar stores are going away. They just have to adapt.”

It’s not about you—it’s about the customer, Bassi says: “It’s all about creating a customer-centric experience that drives ways of interacting with customers via channels they’re comfortable with. You have to figure out how to touch them in different places. Use these methods to get a 360-degree view of the customer, then act appropriately with products and services.”

Like peer-to-peer insurance, the industry is still holding its breath about the Internet of Things (IoT). “From a personal lines perspective, smart homes bring new opportunities for customers,” Pauli says. “You can provide a better service by engaging them more around the benefits of IoT.”

And while it’s debatable whether connected devices like refrigerators will change the insurance landscape or end up translating to lower insurance premiums, “systems like smoke detectors and water sensors—things that can actually save a life and prevent real damage—that’s going to be where people see value,” Sarzen notes.

Increasing Cyber Awareness

Despite its advantages, however, the connectedness of the IoT “clearly creates more of an avenue for cyberattack,” Bassi says. “One of the things companies are becoming aware of is that a cyberattack has actual manifestations beyond the data loss.”

The Aite Group’s top 2017 insurance prediction: Cyber insurance moves beyond coverage for data breaches. Sarzen says agents must start having extensive conversations with their clients about what constitutes a breach: “Businesses still see cyber as just an endorsement. It’s more than sending your customers a notice saying their information has been compromised—it’s a business interruption.”

According to the Insurance Information Institute, 60 carriers now offer cyber insurance—and the U.S. cyber market is worth more than $3.25 billion in gross written premiums, with the potential to grow to $7.5 billion over the next few years.

“Can we expect insurance to help people understand risk management and trends and be their defense in terms of breaches?” Bassi asks. “We see it high on the agenda in 2017, and it calls for immediate attention.”

Jordan Reabold is IA assistant editor.