The changing customer behavior, digital disruption, regulatory pressures, and competitive marketplace are forcing Property and Casualty (P&C) insurers to refine their current strategy and operating models. The P&C insurers are facing various growth-related internal and external challenges that are keeping their executives on toes. From low-interest rates, soft pricing conditions to technology advancements, the expectations to deliver profitable and sustainable growth amidst this change are some of the hurdles the insurers are facing.
In effect, the P&C insurance industry is witnessing the following challenges:
1. Increased Competition
Over the past few years, the P&C carriers’ capacity to insure has steadily grown. The insurance industry continues to add capacity and this can be attributed to new players that offer their services online. These changing dynamics have intensified the price-based competition, driven market expansion into new geographies, and motivated insurers to develop new products.
2. Technology Advancements
Augmented reality, networked devices, and other emerging digital technologies have shown new avenues, which can create new revenue opportunities for insurance carriers. Technology advancements are responsible for changing customers’ behavior and expectations. Insurance industries are struggling to keep up with this technological evolution. Investment in digital platforms and solutions have become essential to enhance the operational efficiency and reduce risk exposures.
3. Outdated Technology Infrastructure
Outdated technology infrastructure (legacy policy and underwriting systems) are obstructing the insurer’s growth and the abilities to regulate operational cost, business demands and customer requirements. With the advanced analytics, robotic process automation, and other emerging applications, insurers today have possibilities to streamline core operation processes such as sales and underwriting.
4. Rising Costs of Operations
With an un-kept or outdated s/w, one has to align more resources to do the job which could be done quickly, neatly and efficiently by a comprehensive modern system. There are many statutory reports and mandatory audit reports which are needed to be shared with government agencies. Companies spend a lot of human resource and time to get these reports prepared and reviewed, with an electronic system these reports can be quickly generated and reviewed.
5. Customer Engagements
The digital disruption has put the spotlight back on the customer. Customer engagement demands ongoing customer focus, operational efficiency, process and people excellence, product-service innovation, agility and organizational alignment. With the changing digital landscape, the company needs to reassess its business model with a focus on customers with a customized value proposition.
6. Business Intelligence
A new era of business intelligence is upon us, which focuses on leveraging data to make an informed decision and gain competitive advantage. While data is an asset, it needs to be managed appropriately. Data captured from various digital sources helps carriers mitigate loss, improve underwriting, manage pricing, personalize products and enrich the customer experience.
The P&C insurers need to be more prudent and precise in addressing the above challenges. Damco’s proprietary solution InsureEdge is one such product aimed at solving some of the problems insurers faces – increased competition, consumerization, shifting consumer behaviour, growing use of electronic channels, major catastrophic events, and regulatory changes. InsureEdge is an integrated, scalable solution that can be deployed on-premise or in the cloud, enabling easy implementation.
As execution is the key element for delivering success, insurers should first restructure their execution engines based on the business models, resources and internal parameters, before making heavy technological investments. InsureEdge is an easy-to-configure, Microsoft based policy administration software with the industry’s most comprehensive insurance processing functions for all lines of business.
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