hyperexponential, a pricing platform for global re/insurers, has observed that while new technology has opened up significant opportunities, issues with the broader ecosystem and outdated systems are hindering innovation and limiting insurers’ efficiency, profitability, and collaboration.
As per the firm’s State of Pricing 2024 report, a massive 96% of underwriters and actuaries feel their pricing technology requires improvement, up from 84% in 2023.
At the same time, only 8% of insurers rely solely on traditional spreadsheets or Excel for pricing, highlighting the widespread adoption of modern pricing platforms.
Meanwhile, 47% of hyperexponential’s respondents say they are unable to price optimally because of integration with new and legacy tech.
51% also perceive their current tech as failing to meet the demands of a rapidly changing risk environment, and 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,” the firm’s report noted.
Insurers’ bottom lines are also reportedly 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 maximising profitability and 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.”
