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Data-driven or Data-drowned? The path forward for modern insurance practices

Data & insights

3 minutes

From IoT to drones and social media to dashcams, there’s never been more data available to insurers. This should be good news for pricing accuracy, but it’s not.

Editor's note: This article is an excerpt from The State of Speciality and Commercial Pricing report, based on research conducted by independent research firm Coleman Parkes on behalf of hyperexponential.

Data data everywhere... except where it’s needed

Ingesting and analyzing this data is still a problem for Specialty and Commercial actuaries and underwriters. 81% don’t believe their current pricing technology allows them to make the best data-driven decisions.

Third party data ingestion is a particular issue, with 86% of underwriters complaining it takes over two hours a day, on average, and nearly half saying it takes more than three. Less than a third of respondents said external data is automatically ingested into their pricing models showing this remains a manual process for most insurers. Internal data is little better – a third of respondents think moving data from older platforms takes too much time and there is a lack of regular reporting.

Specialty and Commercial insurers are faced with wrangling small, sparse, and fragmented data, so when tooling blocks teams from leveraging useful data that could otherwise be available to them, the quality of risk acceptance and pricing decisions drops. These accumulate into portfolio level vulnerabilities.

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The data conundrum

Both UK and US respondents agree that data handling is an issue, but their areas of concern differ. In the UK, 31% consider the lack of in- house skills to make the most of the data a key blocker. For US respondents, whilst data skills were also a problem, hours wasted on rekeying data and the lack of real-time visibility into their portfolio are the top two concerns.

There’s a huge amount of unrealized value sitting in untapped data sources – 35% of actuaries say they lack the technology to handle the sheer volume of data. Historic data remains very siloed, with 34% of underwriters blaming siloed data for a lack of pricing transparency and their inability to underwrite emerging risks effectively.

Looking ahead, accessing the right technologies, including emerging AI capabilities, and the skill sets to turn unruly data into actionable insights and decisions will be table stakes for insurers. When asked how technology could enhance their roles, both actuaries and underwriters stated “making it easier to obtain and manipulate large volumes of data” and “create more accurate pricing models” in their top three responses.

It’s really time for real-time

A third of Specialty and Commercial underwriters and actuaries (34%) lack regular reporting on pricing and underwriting data. In the UK, pricing model reporting takes actuaries 48 days. In the US, it’s 25 days, which is still the best part of a month spent delivering insights into pricing model performance. Real-time insights are a distant pipe dream for most.

Improved reporting for insurers is not just about de-risking business, but ensuring best practices that improve profitability. Enabling accurate and up-to-date reporting saves costs today and will increase future retained profits by preventing future fines.

It starts with connected tech

Reporting issues stem from underlying tech infrastructure – 47% of pricing actuaries claim their current technology is difficult to audit and report from.

Technology can streamline reporting through better data capture and the integration of different data systems, but it can only do so if insurers strategically choose and integrate the right technology. Insurers need to streamline their tech stack not only so actuaries and underwriters switch between fewer and more compatible platforms, but also so they can easily access the most cutting edge technologies, including AI. Data should travel quickly and transparently between systems, saving time and enabling real-time visibility 
 and automated reporting.

To learn more, explore the full State of Specialty and Commercial Pricing 2023 report now. Download it here.

For the US-specific edition, download The State of US Commercial P&C Pricing 2023 here.