Leveraging data for increased underwriting accuracy, customized policies and streamlining business operations are some of the top trends for property/casualty insurers in 2024, according to a report by Capgemini.

As P/C carriers look for ways to better assess customer insurability, they will rely on predictive analytics to recalibrate their underwriting processes for more precise risk assessment.

Many carriers are re-evaluating underwriting and risk-pricing strategies as climate-related perils and emerging liabilities grow in complexity and frequency, Capgemini’s Insurance Top Trends for 2024 report stated.

With many carriers reducing coverage and increasing premiums to address heightened risk concerns, they are now looking to enhance risk assessment and underwriting procedures for more precise risk categorization.

According to the report, data collection is a top priority for insurers “as they work to harness historical data and tie it in to data collected via connected cars and other smart devices.”

Insurer collaboration with InsurTechs and data providers for real-time data insights to strengthen underwriting is growing. In addition, they are increasingly using “digital twins” – a digital model of a physical object or location – as a way to evaluate risks even more.

According to the report, “Accuracy gains in risk modeling translate to more precise pricing strategies” giving insurers the ability to better customize premiums.

Through the use of artificial intelligence, satellite/aerial imagery and data analytics, insurers can identify emerging risks in advance, improving reserve accuracy and reducing the likelihood of large losses.

Additional areas expected to gain momentum are the use of generative AI and increased cloud adoption, as carriers look for ways to address pain points in both underwriting and claims processes.

Carriers are using AI to generate “low risk content” like reports, customer communications and marketing materials as a way to reduce costs and optimize resource allocation, the report stated.

The focus on increased cloud adoption specifically for migrating data, application, and services to cloud-based platforms gives carriers a way to transition core processes away from legacy systems.

The ability to do so in phases provides carriers greater agility in their business processes.

“Technological agility and scalability will help insurers tackle long-standing speed-to-market challenges and offer hyper-personalized solutions to meet ever-evolving customer demands while realizing operational efficiency,” the report stated.

Increased cloud adoption eliminates “on-premises hardware and complex infrastructure management” leading to cost savings.

Legacy systems, an anchor to innovation for many carriers, are being augmented by way of low code/no code platforms providing a way to develop “software, services and information systems,” giving insurers the ability to rapidly deploy new products in response to market conditions.

The low code/no code platforms bridge technical and non-technical staff and reduces software development costs, benefits that lead to greater operational excellence.

It’s expected that AI and increased cloud participation will lead to increased customer satisfaction and operational efficiency.

While the focus for carriers has been asset coverage, it is moving to “safeguarding mobility journeys – evolving their role from developers to solution co-designers.”

This evolution allows insurers the ability to offer subscription coverage and” reduce some disintermediation risks generated from embedded insurance,” the report stated, adding that “Modular subscriptions leverage insurers’ advanced risk modeling capabilities to meet customer expectations for seamless multi-modal coverage.”

Embedded insurance continues to be an area of interest as carriers explore new markets, the potential for cross-selling and the development of personalized omnichannel solutions to increase market penetration and enter new ones, the report added.

Carriers are exploring customers’ preferred platforms to connect with target audiences through embedded solutions.

The report explained that a revamped IT architecture is a necessity in order to accommodate application programming interfaces (APIs) in order to integrate insurance coverage seamlessly into third-party retailers’ platforms.

Quantum computing will eventually be tapped to “incorporate greater complexity in current risk models” enhancing the underwriting process even more.

“We anticipate the industry will beef up the adoption of cutting-edge technologies – cloud, digital twins, smart devices, and predictive analytics – to streamline underwriting and claims processes, optimize operations, and enrich customer experience,” said Anirban Bose, financial services strategic business Unit CEO at Capgemini.

While the benefits of tech adoption are easily seen through improved customer engagement and satisfaction, enhanced market penetration and product innovation, accurate pricing and underwriting and faster claims resolution, there are some caveats.

Carriers will need to monitor the increased risk of cyber threats while monitoring regulatory compliance in handling customer data and data privacy.