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83% of Underwriters are Unhappy With Archaic Technology, as Insurers Fail to ‘Embrace’ Pricing Data

Speciality and commercial insurers may be failing to realise the high value of data which could help make better pricing and portfolio decisions; new research commissioned by pricing decision intelligence leader hyperexponential.

A survey of 350 speciality and commercial underwriters and actuaries about insurance technology, conducted by independent research firm Coleman Parkes, reveals that the biggest data issues for insurers largely depend on region.

While not being able to access real-time visibility into portfolios is the leading issue for US respondents, the UK struggles most with difficult processes and internal compliance.

Insurers’ basic technology fails to quickly and accurately ingest and process large datasets.  Ultimately, this issue means that they cannot use this data to generate insights to price risk better.

Overall, around 83 per cent of the underwriters and actuaries surveyed are unhappy with the current technology in place. Only 19 per cent of respondents said they believe their technology enables them to make data-driven decisions.

Pricing may well be what is causing these high levels of dissatisfaction with existing technology at firms. Fifty-six per cent stated their pricing platforms are failing to deliver what was promised, with 45 per cent claiming that although they purchased new pricing technology, they have yet to realise value from it. Hyperexponential explained that this is because traditional pricing tools act as ‘spreadsheet replacements’ rather than as a decision engine.

Failing to accurately price risk and wasting time on admin
Tom Chamberlain, VP of customer and consulting at hyperexponential on Insurers data technology
Tom Chamberlain, VP of customer and consulting at hyperexponential

Tom Chamberlain, VP of customer and consulting at hyperexponential, commented on the findings: “Pricing decisions are the most important lever insurers can pull on profit and loss, but few have been able to achieve meaningful transformation.

“Today, speciality and commercial insurers have the potential to price and assess risk more accurately than ever before using IoT, drones, social media, dash cams, and wearable technology such as smartwatches. But they still think pricing is just a one-time number when it is so much more than that. Combined with the right data and technology, pricing insights can be used to make better business decisions.

“Our research shows a new generation of speciality and commercial insurers are painfully aware of these shortfallings and those who can embrace modern pricing technology and processes will win out.”

Time-consuming and difficult underwriting processes performed on old technology sees highly-trained and highly-paid underwriters and actuaries wasting valuable time on simple admin tasks.

Underwriters spend around three hours per day on data entry on average. For actuaries, releasing new pricing models takes on average 192 days for US actuaries and 150 days for UK actuaries. The main barrier to underwriting today’s evolving risks, according to respondents, is the risk landscape shifting too rapidly.

Author

  • Tom joined The Fintech Times in 2022 as part of the operations team; later joining the editorial team as a journalist.

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