The property and casualty (P&C) insurance industry is rapidly evolving and is facing unprecedented times in terms of change. They are faced with an increasingly competitive landscape, emerging technologies, pressures of regulatory compliance, and soaring customer expectations. To keep pace, P&C insurance carriers need to reinvent and transform themselves and embrace innovation that can disrupt. But, most of these players are hindered by greater woes like their limited IT resources and age-old monolithic legacy systems that hamper their business transformation.
In short, the radically transforming P&C insurance sector has a hoard of challenges that needs to be addressed in urgency for the players to thrive and stay relevant.
Top challenges of P&C Insurance carriers in 2022
Let’s explore the key P&C insurance industry challenges.
Increasing competition and new entrants
With the consistently high demand for P&C insurance, the industry has expanded and grown rapidly over the past few years, especially, and this trend is expected to go uphill. This increasing demand and expanding consumer base have attracted new entrants into the market and to thrive, all the players are trying to innovate and add capabilities that can bring about a competitive advantage for them. The changing industry dynamics have intensified price-based competition and are pushing insurers to aggressively adopt new technologies and develop new offerings.
Emerging new technologies
Innumerable new technologies are being introduced into the business world and the insurance industry, which was once called tech laggards, is now eager to adopt them and create a differentiating factor to keep competition at bay and to tackle some of their most crucial challenges. But this in itself has become a stumbling block to most players in the industry. A recent survey revealed that more than 30% of insurers are unaware of the technologies that are the right fit for them and a majority lack insights on the benefits specific technologies can bring about. Thus, it is no surprise that a vast number of P&C insurers are struggling to keep up with the rapid technological evolution, and this, in turn, has been hampering their operational efficiencies, cost-cutting measures, ability to innovate and undergo a transformation.
Legacy IT systems
Modernizing the core IT systems has been one of the top priorities for most insurers and the case of P&C insurers is no different. P&C insurers are constantly obstructed in their digital transformation efforts due to the monolithic legacy systems that eat up a majority of their IT budget through maintenance costs, leaving very little for innovation. These outdated systems that are most commonly built on COBOL, Delphi, etc., require heavy maintenance and it is increasingly becoming difficult to find IT resources experienced in working on them. These IT systems also hinder the streamlining of operations, creating a lag and often not allowing the integration of advanced technologies like RPA and other automation.
Rising operational costs
Outdated IT systems and applications, critical underwriting challenges, and the need for niche IT resource also results in increased inefficiencies and increasing operational expenses. Being unable to integrate automation capabilities, it becomes all the more difficult, adding to the costs. Most of these outdated systems involve a lot of manual processes, especially those related to regulatory compliance, and without automation, these would need to be done manually, increasing the chance of errors and expenses.
Customer expectations and customer relationships
Increasing customer expectations in terms of offerings and services are yet another key challenge that P&C insurers need to tackle to expand their customer base, ensure customer loyalty, and boost revenues. And to ensure that insurers need to create the right synergy of products, processes, and technology. With an infinite amount of competition, it is common for customers to shift loyalties to a player that offers them a better deal or products that most fit their requirements, especially those who can quickly churn out insurance products as per the rapidly changing preferences. Customers, today, are increasingly looking at hyper-personalization of products, hence, P&C insurers need to reassess their business models focusing better on delivering a customized value proposition.
Data and analytics
Yet another challenge for the insurance industry as a whole is the enormous amount of data that is generated but most insurers are unable to leverage this data to convert them to business intelligence and power their decision making and gain a competitive advantage. Data management is also a critical challenge for them. Insurers can use the data captured to help them in mitigating losses, improving P&C underwriting, managing pricing, personalizing products, and enriching the customer experience.
How to overcome the critical P&C insurance challenges with Axcel Beck’s Guidewire solutions?
Axcel Beck can help P&C insurers strike the right balance between growth and costs, and enable them to respond faster and better to the market needs. Through our unique Guidewire solutions, Axcel Beck can help insurers transform into true digital enterprises with an ecosystem of powerful capabilities.
By being the right digital transformation partner, we can help to solve some of the most pressing P&C insurance problems. With industry-leading Guidewire solutions, we enable you to embark on a digital transformation journey with our end-to-end approach and implementations, that can open new avenues to drive business growth, improve speed to market, decrease loss ratios, and reduces operational costs significantly.
Our integrated Guidewire services portfolio is curated to help P&C insurers tackle their most key challenges and drive greater efficiency and effectiveness, all the while enabling them to innovate and transform their businesses for the future. We help to drive process improvements, provide core modernization solutions, and complete advisory solutions to transform P&C insurance businesses for the digital era.
Axcel Beck- Your Digital Transformation Partner
Axcel Beck Consulting is a new-age, global insurance technology consulting firm offering unified solutions for integrating technology products across the insurance banking and financial value chain. Axcel Beck is on a path to becoming a world-class digital transformation partner enabling businesses to deliver high-touch convergent experiences that are not only human but also insightful and data-driven.