- 62% of insurance executives recognize artificial
intelligence/machine learning technology (AI/ML) as elevating
underwriting quality and reducing fraud
- 43% of underwriters trust and regularly accept automated
recommendations from predictive analytics tools but many still have
concerns around complexity and data integrity
The Capgemini Research Institute’s World Property and
Casualty Insurance Report 2024, published today, reveals the
underwriting capabilities of insurers are being restricted by
organizational constraints. According to the report, only 8% of
property and casualty (P&C) insurers are regarded as
underwriting “trailblazers” who are consistently outperforming
mainstream carriers by leveraging AI-driven insights and automation
to make informed decisions and accurate risk assessments with
efficiency. These industry frontrunners drive greater collaboration
and customer transparency by keeping underwriters at the heart of
all decisions.
Challenges mount for P&C insurers
As inflationary pressures hit policyholders’ pockets, there is
increased demand for affordability, simplicity, and transparency
from their carrier. According to the report, 42% of policyholders
find the current underwriting process complex and lengthy.
Additionally, 27% of policyholders switched providers in the last
two years in search of lower premiums (60%) and better coverage
(53%).
While premiums have increased, underwriting practices have
struggled as combined ratios breached 100% sparked by natural
catastrophe events, evolving risks due to technology innovation
such as cyber threats and emergence of generative AI, and
regulatory complexity. Capgemini research shows industry executives
cite significant organizational barriers affecting their ability to
delight the customer: insufficient access to data (54%), legacy
systems (51%), and a lack of skilled talent (47%).
“Today’s insurer is operating in one of the most precarious
environments in recent memory. The industry must react to this
volatility by rethinking the underwriting rule book,” said Adam
Denninger, Global Insurance Industry Leader at Capgemini. “It
requires shifting away from legacy models by modernizing core
systems and deploying advanced technologies that drive better
outcomes and transparency. Embracing AI-driven insights and
automation is crucial for the industry to drive a competitive path
towards underwriting profitability that adapts to evolving risk
dynamics and policyholder behaviors.”
Underwriters’ confidence is key to reap trailblazer
benefits
The report finds that 62% of executives recognize artificial
intelligence/machine learning technology (AI/ML) is elevating
underwriting quality and reducing fraud. Despite these benefits,
only 43% of underwriters trust and regularly accept automated
recommendations from decision-support predictive analytics tools.
This hesitation stems from perceived overcomplexity (67%) and
concerns over data integrity (59%). Insurers can overcome their
reluctance, cites the report, by engaging underwriters early on to
secure buy-in, retain the all-important “human in the loop” to
ensure the AI/ML models are explainable and appropriately
transparent, and continually assess progress.
While some carriers show promise in these areas, not many
insurers successfully showcase the “trailblazer” 1 qualities to
deliver fast, unbiased, and forward-looking underwriting decisions.
Armed with the right advanced underwriting capabilities,
trailblazers can expect to reap benefits across efficiency (higher
speed and lower expenses), accuracy (loss costs and fraud
detection), and customer experience (new business and policyholder
retention). The analysis finds that less than 13% of this group
miss business goals associated with these priorities, compared to
21-36% of mainstream insurers.
Streamlined underwriting begins with unlocking deep data
insights
A majority (83%) of P&C insurance executives believe
predictive models are critical for underwriting’s future, yet only
27% say their firm has advanced capabilities. The journey to
unlocking data-driven and actionable insights begins by leveraging
a secure data ecosystem.
Globally, 53% of policyholders express concern about the amount
of personal information collected by insurers. However, almost
two-thirds say they would be willing to share more data in exchange
for transparency, discounts, and reassurance that their information
is secure. This sentiment represents a chance to scale up risk
mitigation propositions and enhance insurability while building
engagement and trust, leading to higher customer retention.
P&C insurers face a considerable challenge in meeting the
data needs of their underwriters as there are significant gaps
between the importance of various data types and insurers’ data
capability maturity. According to the report, 49% of underwriters
value drone image data yet very few insurers are equipped to
support and analyze them effectively. Similarly, one-in-two
underwriters want data from connected devices for real-time
information about personal and commercial assets, although only 12%
of insurers can capture such data effectively.
According to the report, the resulting lack of data mastery is
hurting an insurer’s core business as incomplete risk evaluation
plagues 77% of insurers. With weak data resources, 73% of firms are
facing limited pricing accuracy which prevents adequate claims
coverage and eventually may threaten solvency. Another 70% say
inconsistent underwriting decisions are a prevailing issue.
Report Methodology
The World Property & Casualty Insurance Report 2024 draws
data from three primary sources: the 2024 Global Insurance Voice of
the Customer Survey, the 2024 Global Insurance Executives’ Survey,
and the 2024 Global Insurance Underwriters’ Survey. Primary
research covers insights from 18 markets: Australia, Belgium,
Brazil, Canada, France, Germany, Hong Kong, India, Italy, Japan,
Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, the
United Kingdom, and the United States.
About Capgemini
Capgemini is a global business and technology transformation
partner, helping organizations to accelerate their dual transition
to a digital and sustainable world, while creating tangible impact
for enterprises and society. It is a responsible and diverse group
of 340,000 team members in more than 50 countries. With its strong
over 55-year heritage, Capgemini is trusted by its clients to
unlock the value of technology to address the entire breadth of
their business needs. It delivers end-to-end services and solutions
leveraging strengths from strategy and design to engineering, all
fueled by its market leading capabilities in AI, cloud and data,
combined with its deep industry expertise and partner ecosystem.
The Group reported 2023 global revenues of €22.5 billion.
Get The Future You Want | www.capgemini.com
About the Capgemini Research Institute
The Capgemini Research Institute is Capgemini’s in-house
think-tank on all things digital and their impact across
industries. It is the publisher of Capgemini’s flagship World
Report Series for over 25 years with dedicated focus for Financial
Services and publishes thought leadership on digitalization,
innovation, technology and business trends that affect banks,
wealth management firms, and insurers across the globe. Independent
agency rated a recent World Retail Banking Report, published by the
Institute, as one of the top 10 publications among consultancy and
technology firms globally.
Visit us at https://worldreports.capgemini.com
1 Trailblazing underwriters actively leverage advanced
technology to deliver real-time, data-driven recommendations and
decisions. By seamlessly integrating third-party and traditional
data sources, these pioneers foster a collaborative ecosystem that
keeps underwriters at the core while promoting transparency with
customers.
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version on businesswire.com: https://www.businesswire.com/news/home/20240417159190/en/
Fahd Pasha Tel.: +1 647 860 3777 E-mail:
Fahd.Pasha@capgemini.com