Digital transformations have spurred exponential profitability across various sectors including ridesharing, retail, banking, and travel. However, according to hyperexponential, despite being a data-rich sector, the insurance industry has been slower in achieving this level of growth.
The reluctance to evolve and meet rapidly shifting consumer demands for convenience and personalisation could be the culprit behind this, hyperexponential (hx) explained.
Nevertheless, as the insurance industry grapples with its new normal, the use of emerging technologies to enhance efficiency and meet customers’ evolving needs is becoming more commonplace. The pressing question remains, where should insurers start their journey of digital metamorphosis?
To help answer this, hx analysed the annual reports of the top 13 specialty insurers in the UK over the last five years, deploying Natural Language Processing (NLP). The findings highlight that pricing transformation has emerged as a key focus area for forward-thinking insurers.
hx’s analysis paints a clear picture: since 2017, the two key transformational focuses have consistently been pricing and claims. However, in the last three years, the priority on claims projects has witnessed a significant downturn, notably post-COVID-19. In contrast, pricing transformation has remained a top focus for leading insurers, reflecting the turbulent market landscape that calls for swift pricing changes to adapt to fluctuating interest rates and maximise profitability.
Nonetheless, not all insurers are currently prioritising pricing transformation. In an industry notorious for its slow pace of change and technology adoption, a sizable portion of insurers are still reliant on obsolete tools to price 21st-century risk. This results in these businesses running the risk of being left behind. A forward-looking insurer should not only manage claims efficiently but also focus on making sound pricing and portfolio decisions for the present and future.
A 2022 PwC underwriting transformation report surveyed senior leaders from London Market insurers, asking about the most important drivers for their technology transformation. The insights obtained underline why pricing remains a top priority. The shift from manual to next-generation pricing positively affects various strategic levers, including profitability, data, regulatory compliance, and employee productivity. This makes it a high-impact change programme that can greatly contribute to an insurer’s success.
Staying ahead of the pricing evolution is critical for insurers, and technology adoption plays a pivotal role in this process. Our cutting-edge pricing tool, hx Renew, helps actuaries and underwriters navigate pricing processes more efficiently and confidently. Its integrated capabilities facilitate rapid building, deployment, and refinement of pricing models, while eliminating manual rekeying and saving resources.
It is crucial for insurers to give priority to pricing transformation as a vital part of their digital transformation strategy. Innovations such as hx Renew can streamline the ideal insurance pricing workflow, positioning tech-focused syndicates, actuaries, and underwriters as the best partners for the future.
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