hyperexponential’s State of Pricing Report 2024 found that 96% of underwriters and actuaries feel their pricing technology needs to be upgraded, up from 84% in 2023. Simultaneously, the report found that only 8% of insurers are relying on traditional spreadsheets or Excel, underlining the widespread adoption of modern pricing.
47% of the survey respondents stated they are unable to price optimally because of integration issues between new and legacy technology. Further, 51% see their current technology as failing to meet the demands of rapidly changing environments, while only 19% of insurers automatically ingest external data through pricing models.
The report noted that: “The net result of this lack of integration and the failure to address broader pricing ecosystems are severe efficiency losses, wasted hours of skilled labour, and a lack of collaboration between the most fundamental cogs in the pricing workflow – underwriters, actuaries, and IT.”
The report also found that insurance bottom lines are being impacted, with only 21% of actuaries and underwriters believing their current technology is allowing them to make the best data-driven decisions. 45% see it as a barrier to optimising profitability, and 34% report it is causing a loss of business to competitors, up from 29% in 2023.
Amrit Santhirasenan, CEO and Co-founder of hyperexponential, commented: “The insurance industry is increasingly playing catch-up when it comes to technological transformation, with other large legacy tech-dependent sectors showing that successful digital projects can be delivered far quicker.
“While the buzz around AI is inescapable and the potential benefits undeniable, its true value can only be fully harnessed when insurers get their own houses in order.
“The reality is the sector’s current pricing infrastructure doesn’t have the capacity to support this technological innovation, and an over-reliance on archaic, inefficient, and ineffective processes and technology is proving a major barrier.
“The message from both actuaries and underwriters is clear. They want to see significant operational improvements. Manual tasks like data cleansing and rekeying can be alleviated with the right pricing technology and rich data sets.
“This can also cultivate a more productive, collaborative, and future-focused environment that gives insurers a competitive edge, priming them to take advantage of groundbreaking technological innovation such as AI.”
Source: Reinsurance News
