The survey, which involved 350 Specialty and Commercial underwriters and actuaries, highlights the key data challenges faced by insurers, varying by country. For US respondents, the lack of real-time visibility into portfolios is the leading issue, while in the UK, it is the burden of onerous processes and internal compliance. Insurers struggle with outdated technology that hampers their ability to efficiently ingest, process, and derive insights from large datasets to enhance risk pricing accuracy.
Current pricing tools are falling short of expectations, with both underwriters and actuaries expressing dissatisfaction with their existing technology. An overwhelming 83% believe that technology improvements are necessary. Only 19% of respondents feel that their technology enables them to make data-driven decisions.
One of the primary causes of discontent with current technology is pricing-related. More than half (56%) of the participants state that their pricing platforms fail to deliver on their promises, and 45% claim that despite investing in new pricing technology, they have yet to realize its value. Traditional pricing tools often function as mere spreadsheet replacements instead of serving as decision engines.
Cumbersome pricing and underwriting processes, coupled with outdated technology, result in highly skilled underwriters and actuaries spending valuable time on administrative tasks. On average, underwriters devote three hours per day to data entry, while releasing new pricing models takes an average of 192 days for US actuaries and 150 days for UK actuaries. Respondents attribute the main barrier to underwriting evolving risks to the rapid pace at which the risk landscape changes, reflecting the substantial time wasted on administrative duties.
It is time for insurers to embrace pricing decision intelligence (PDI) instead of relying solely on pricing platforms. Pricing platforms were designed to expedite the creation of complex pricing models, serving as replacements for spreadsheets. However, they lack the capability to rapidly transform data into insights that drive profitable decisions in today’s fast-changing risk landscapes. With PDI, insurers can establish an iterative feedback loop between their data, insights, and decisions, enabling them to leverage their extensive pricing data for continuous improvement aligned with market dynamics.
Tom Chamberlain, VP Customer and Consulting at hyperexponential, commented on the industry’s flawed approach to pricing, emphasizing that pricing decisions are critical for insurers’ profit and loss. He highlighted the potential of modern technologies such as IoT, drones, social media, dash cams, and wearable devices like smartwatches to enhance risk assessment and pricing accuracy. However, insurers must recognize that pricing extends beyond a one-time number and embrace modern pricing technology and processes to achieve meaningful transformation and gain a competitive advantage.
