Capgemini’s Roadmap for P&C Insurers to Thrive in 2024 and Beyond
The World Property and Casualty Insurance Report 2024 is an annual publication by Capgemini, a global consulting firm. Based on surveys of insurance executives, underwriters, and customers, the report analyzes trends and developments in the P&C insurance industry. As consultants with deep expertise in the insurance sector, the report’s authors provide valuable insights and recommendations that can help insurance company executives navigate a rapidly changing business landscape and develop strategies for growth and profitability.
P&C Insurers’ mounting challenges
According to the World Property and Casualty Insurance Report 2024, the property and casualty (P&C) insurance industry faces mounting challenges, with global combined ratios reaching an unsustainable 103% in 2022. The report argues that inflationary pressures, volatile risk landscapes, and evolving customer needs have rendered traditional underwriting strategies ineffective. As the report’s authors suggest, P&C insurers must urgently transform their underwriting practices to align with the changing market dynamics and customer expectations.
The report provides a comprehensive roadmap for underwriting transformation based on extensive surveys of insurance executives, underwriters, and customers. Its central thesis is clear: By leveraging data, insights, and technology to streamline operations, enhance risk assessment, and deliver superior customer experiences, P&C insurers can navigate the complexities of the current landscape and restore profitability. According to the report, the path to success lies in becoming an underwriting trailblazer, embracing innovation to drive growth and resilience in the face of unprecedented challenges.
The Current P&C Insurance Landscape
The report describes a P&C insurance landscape that is undergoing significant shifts, presenting challenges and opportunities for insurers. On the surface, the industry has witnessed robust premium growth, with a compound annual growth rate (CAGR) of 7.8% for commercial lines and 5.4% for personal lines between 2019 and 2024. However, the report notes that this growth has been primarily driven by rate increases rather than policy sales, masking underlying profitability issues.
Strikingly, the global combined ratio reached an alarming 103% in 2022, marking the third year of underwriting losses in the last four years. According to the report, this trend indicates that the industry’s traditional underwriting models struggle to keep pace with the evolving risk landscape. The authors identify several factors that have contributed to these losses:
– The increasing frequency and severity of natural catastrophes have led to significant claims payouts, with global insured losses exceeding $100 billion for the fourth consecutive year in 2023.
– Rapid technological advancements, such as the proliferation of electric vehicles, have introduced risks that are challenging to assess and price accurately.
– Regulatory constraints in certain jurisdictions have limited insurers’ ability to adjust prices, further compounding profitability pressures.
The report argues that these challenges have exposed the limitations of legacy underwriting practices and highlighted the urgent need for transformation. The authors state that policyholders increasingly demand affordable, transparent, and personalized coverage, putting pressure on insurers to revamp their offerings. Moreover, the rise in combined ratios, according to the report, has underscored the importance of underwriting discipline and the need to align risk assessment with the evolving market realities.
The report posits that P&C insurers must overhaul their underwriting strategies, leveraging data, analytics, and technology to enhance risk selection, pricing accuracy, and operational efficiency to regain profitability and remain relevant in customers’ eyes. The path forward, according to the authors, lies in embracing a customer-centric, insight-driven approach to underwriting that can navigate the complexities of the current landscape and deliver sustainable growth.
Streamlining Underwriting Operations
The report argues that insurers must focus on streamlining their underwriting operations to navigate the challenges of the current P&C insurance landscape. According to the authors, a critical first step is to analyze how underwriters allocate their time and identify areas where they can improve their efficiency.
The World Property and Casualty Insurance Report 2024 highlights three key areas where the authors believe insurers should prioritize for optimization:
First, the report states that insurers must automate administrative tasks that consume a significant portion of underwriters’ time. Administrative activities, such as data entry, record-keeping, and internal meetings, account for 41% to 43% of underwriters’ workload. By leveraging automation technologies, such as robotic process automation (RPA) and artificial intelligence (AI), the authors suggest that insurers can free up underwriters to focus on higher-value activities.
– Second, the report recommends that insurers streamline core underwriting tasks, which currently take up around 33% of underwriters’ time. According to the authors, this can be achieved by augmenting risk assessment, premium calculation, and book management processes with AI-driven insights. The report argues that predictive analytics can enhance the accuracy and speed of complex risk evaluations for commercial lines. In personal lines, real-time data integration can enable straight-through processing for faster policy issuance, as per the report.
– Third, the report states that insurers must prioritize sales enablement activities, which account for only 26% of underwriters’ time. The authors believe that insurers can improve conversion rates and drive premium growth by providing underwriters with tools and insights to collaborate more effectively with agents and brokers. According to the report, this is particularly crucial in commercial lines, where strong relationships with distribution partners are essential for success.
The report argues that insurers can create a more efficient and effective underwriting function by focusing on these three areas. The authors suggest that automation and AI can significantly reduce manual workloads while advanced analytics can improve the accuracy and timeliness of risk assessment. Moreover, the report posits that insurers can enhance customer acquisition and retention by empowering underwriters to engage in strategic sales activities. According to the report, the benefits of streamlining underwriting operations are clear: increased productivity, improved risk selection, and, ultimately, higher profitability.
A Playbook for Intelligent Underwriting
To transform underwriting operations and drive profitable growth, the World Property and Casualty Insurance Report 2024 presents a comprehensive playbook for what the authors term “intelligent underwriting.” This playbook focuses on three key pillars: connecting data dots, unlocking actionable insights, and evolving the underwriter role.
Connecting data dots
The report argues that connecting data dots involves integrating data from various sources to create a holistic view of risk. The authors recommend that insurers deploy risk mitigation tools that leverage IoT sensors, telematics, and geospatial data to assess and manage exposures proactively. According to the report, they must also blend traditional data, such as claims history and property characteristics, with third-party data, including weather patterns, economic indicators, and social media sentiment. The authors stress that building secure data ecosystem partnerships is crucial to accessing diverse data sets and generating comprehensive risk insights.
Unlocking actionable insights
According to the report, unlocking actionable insights requires pioneering predictive analytics capabilities. The authors argue that insurers should harness the power of AI and machine learning to develop sophisticated pricing models that can adapt to changing market conditions. These models should incorporate multiple variables, from policyholder behavior to macroeconomic trends, to enable dynamic, personalized pricing. To build trust in AI-driven insights, the authors believe that insurers must invest in change management initiatives that promote transparency, explainability, and collaboration between underwriters and data scientists.
Evolving the underwriter role
The report states that evolving the underwriter role is essential to realize the full potential of intelligent underwriting. The authors recommend that insurers optimize underwriting workbenches by integrating real-time data feeds, advanced analytics, and workflow automation. According to the report, this will empower underwriters to make more informed decisions and focus on high-value activities. The authors stress that upskilling underwriters in data analytics, risk modeling, and strategic thinking is crucial to prepare them for expanded responsibilities. As per the report, insurers should also deploy underwriters in roles that leverage their expertise, such as portfolio management, product development, and broker relationship management.
The report argues that insurers can deliver tangible business results by implementing this playbook. The authors suggest that intelligent underwriting can drive efficiency by reducing manual tasks, streamlining workflows, and improving straight-through processing rates. According to the report, it can enhance accuracy by enabling granular risk assessment, dynamic pricing, and proactive loss prevention. Finally, the authors posit that it can elevate the customer experience by providing personalized coverage recommendations, transparent risk insights, and seamless service across channels. As per the report, the combined impact of these benefits can be transformative, enabling insurers to achieve sustainable profitability and market leadership.
Lessons from Underwriting Trailblazers
The World Property and Casualty Insurance Report 2024 identifies a select group of insurers, termed “underwriting trailblazers,” who the authors claim have successfully transformed their underwriting operations and achieved superior business outcomes. While these trailblazers represent only 8% of the insurers surveyed, the report argues that their success offers valuable lessons for the rest of the industry.
According to the report, one of the key characteristics of underwriting trailblazers is their ability to consistently meet or exceed their targets across efficiency, accuracy, and customer experience. The authors state that these insurers have optimized their underwriting processes to minimize manual interventions, reduce cycle times, and improve risk selection. As a result, the report claims that they rarely miss their goals for lowering underwriting expenses, increasing underwriting speed, and tightening loss ratios. Moreover, the authors argue that their focus on delivering seamless, personalized experiences has enabled them to outperform their peers in new business growth and policyholder retention.
Several factors that have contributed to the success of underwriting trailblazers:
First, the authors state that they have invested in modernizing their core systems and technological foundations. According to the report, these insurers have enabled real-time data integration, advanced analytics, and workflow automation by replacing legacy platforms with flexible, scalable architectures.
– Second, the report claims that they have cultivated an underwriting culture that embraces change, innovation, and continuous improvement. By fostering collaboration between underwriters, data scientists, and other functions, the authors argue that trailblazers have broken down silos and promoted a data-driven, customer-centric mindset.
– Finally, the report states that underwriting trailblazers have focused their transformation efforts on high-impact priorities. According to the authors, rather than trying to boil the ocean, these insurers have identified the most critical pain points and opportunities in their underwriting processes and targeted their investments accordingly. Whether deploying AI-powered risk assessment tools, streamlining broker connectivity, or enhancing underwriter training, the report claims that trailblazers have pursued initiatives delivering measurable, sustainable value.
The lessons from underwriting trailblazers are clear, according to the report. The authors argue that insurers must embrace a holistic, strategic approach to underwriting transformation to thrive in the face of intensifying competition and evolving customer expectations. By combining advanced technologies with cultural change and focused execution, the report posits that insurers can unlock the full potential of their underwriting operations and position themselves for long-term success.
The report’s conclusions
The World Property and Casualty Insurance Report 2024 argues the P&C insurance industry stands at a critical inflection point. The authors claim that traditional underwriting practices are no longer sufficient to meet the challenges of a rapidly evolving risk landscape and heightened customer expectations. With combined ratios rising and profitability under pressure, the report asserts insurers must urgently transform their underwriting operations to remain competitive and relevant.
To the report’s authors, an insurer’s path forward is embracing intelligent underwriting — a data-driven, customer-centric approach that leverages advanced technologies and analytics to enhance efficiency, accuracy, and customer experience. Also, the report argues that insurers can create a more agile, responsive, and profitable underwriting function by connecting disparate data sources, unlocking actionable insights, and empowering underwriters with new tools and skills.
The benefits of underwriting transformation are compelling, according to the report. The authors suggest that insurers that successfully streamline their operations, improve risk selection, and deliver seamless customer experiences can achieve significant gains in productivity, loss ratio performance, and market share. Moreover, the report claims that by establishing themselves as underwriting trailblazers, these insurers can differentiate themselves in an increasingly crowded and commoditized marketplace.
However, the authors caution that realizing these benefits requires bold, strategic action. Insurers must be willing to invest in modern technologies, rethink their organizational structures and processes, and cultivate a culture of innovation and collaboration, according to the report. The authors also warn that insurers must be prepared to navigate change management challenges, regulatory compliance, and data privacy and security.
Ultimately, the report concludes that the future belongs to insurers that can harness the power of data, analytics, and human expertise to deliver intelligent, insight-driven underwriting. By embracing this vision and executing the strategies outlined in the World Property and Casualty Insurance Report 2024, the authors argue that insurers can not only survive but thrive in the face of unprecedented challenges and opportunities.
Free copy of the report
Capgemini provides free copies of the report on its website. Click here on “World Property and Casualty Insurance Report 2024“
About Capgemini
Capgemini Consulting is a global management consulting firm headquartered in Paris that provides strategy, technology, and transformation services to clients across various industries. With revenue of over 22.5 billion euros and 340,000 employees in 50 countries, it offers end-to-end solutions spanning strategy, design, operations, and digital transformation. Capgemini Consulting is known for its expertise in areas like cloud, data, AI, connectivity, and digital engineering. It aims to help clients unlock the value of technology and drive business transformation through its collaborative approach and industry-specific knowledge. The firm has a strong focus on innovation and has established dedicated units like Capgemini Invent and Capgemini Engineering to cater to evolving client needs.
