A new report showed that companies are struggling to progress even with tech on their side.
Even with all the innovations in P&C insurance technology, the complex nature of the industry is continuing to stand in its way.
This branch of the industry is on the edge of major change but is being held back by complexities.
As we reach a time in which more revolutionary approaches and innovative technologies are more available than ever, the complex P&C insurance industry is scrambling and stumbling in its efforts to keep up, said a recent PropertyCasualty360 report. Insurers are facing considerable pressure to embrace innovation, improve agility and focus on revenue and growth. While many are making attempts, hurdles in the form of clunky existing processes and widespread complexities are standing in the way.
There are two primary areas, said the report, in which complexities are the most problematic. These include the fact that insurance itself is complex. The other is that the systems in place across the industry are a tangled and intricate web.
The very nature of P&C insurance already comes with the intricacies of predicting and pricing risk. Combined with the substantial rate of growth in the industry during the last few decades, the range of new coverages that have been added and the impact of the increasingly rapid changes from a warming planet have all compounded this issue.
New P&C insurance coverages are among the largest contributors to increased complexity.
Across the last couple of decades, insurers have been spending considerable money on building complex risk prediction and pricing strategies. This has brought in a rise of risk models, actuaries, and data, in the hopes that premiums will better reflect the actual risk of coverage. What has occurred, according to the report, is that “they have muddied the waters by throwing money at the problem rather than simplifying the process.”
Compounding the problem is that government officials and regulators have started paying close attention to the methods insurers are using. This has resulted in legislation that only furthers the industry’s complexity.
“Insurance companies have essentially ‘shot themselves in the foot because the government does not trust them,” explained the report. On top of their own complex risk prediction methods, insurers must now stay within the boundaries of regulation compliance. While innovation in this industry should be broad and advanced, its history has only ensured that this cannot currently be the case.