An overwhelming 96% of underwriters and actuaries feel their pricing technology requires improvement, up from 84% in 2023. While only 8% of insurers still rely solely on traditional spreadsheets or Excel for pricing (indicating widespread buy-in for modern pricing platforms), modernisation, integration and implementation remain key hurdles.
• Nearly half (47%) of respondents say they are unable to price optimally because of integration with new and legacy tech
• 51% perceive their current tech as failing to meet the demands of a rapidly changing risk environment
• Only 19% of insurers automatically ingest external data through pricing models
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.
• Underwriters spend three hours a day on average manually entering data into systems
• The vast majority (76%) of actuaries take over a month to build a new pricing model (with 14% taking more than a year); while nearly half (48%) will take more than 30 days to implement a complex parameter and algorithm change
• 76% of actuaries and 77% of underwriters believe there is room for improvement in how they work together; actuaries rate their collaboration with IT, an often overlooked but vital dynamic, the lowest out of all inter-team partnerships at just 2.7/5
Ultimately, insurers’ bottom lines are also being hit, with just 21% of actuaries and underwriters feeling their current pricing technology is enabling them to make the best data-driven decisions, 45% seeing it as a barrier to maximise profitability and one third (34%) reporting it’s resulting in a loss of business from competitors, up from 29% in 2023.
Amrit Santhirasenan, CEO and Co-founder, hyperexponential, commented: “The insurance industry is increasingly playing catch up when it comes to technological transformation, with other large legacy tech dependent sectors showing 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.”
A full copy of hyperexponential’s State of Pricing 2024 report is available here.
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