Insurers must be able to ‘turn on a sixpence’ to tackle claims inflation – Earnix

Insurers must be able to “turn on a sixpence” and prioritise operational agility to be able to implement pricing and underwriting changes quickly against the backdrop of rapid claims inflation. 

This is according to Earnix chief executive Udi Ziv, who said he believed that many insurers currently lacked the operational agility to respond to this form of inflation. 

Ziv said: “Pricing products when it is difficult to predict how much claims will cost in six or 12 months is one of the biggest challenges insurers face in a perfect storm of converging issues threatening insurance businesses.

“Insurers need to be able to realise when change is needed, analyse what changes need to be made, make the best decision possible and then drive these strategies to market quickly.

“Underwriting is not fit for the world we now live in now.

“Decisions are not analytics-based, cross-team collaboration is inefficient – if it happens at all – and the time-to-market for changes is too long.”

This pricing dilemma was also referenced by Ziv at Earnix’s conference in London during September.

Rising inflation

Ziv emphasised speed and agility as key facets of helping insurers “reimagine insurance” through intelligent operations.

He added: “Speed, agility, intelligence and compliance are mission-critical attributes, not just in pricing and underwriting, but across all aspects of insurance operations given the many challenges insurers face today, including inflation, supply chain disruption, climate change, evolving consumer expectations, declining customer retention, changing working dynamics and regulatory constraints.

“All of this turbulence is affecting the stability and certainty insurance is built on and challenging the entire insurance industry itself. Q2 was the worst quarter for the property and casualty industry in a decade and the reason is this perfect storm of challenges.

”In this environment, insurers need to embrace speed, agility and intelligence in order to compete.”

Intelligent insurance systems are playing a key role in helping insurer combat inflation. These systems enable insurers to analyse claims costs, conversion rates, customer behaviours and market trends in real time and then implement changes through simple, efficient and scalable digital workflows.

For example, Earnix reported reductions in the time it takes to make pricing changes using its Price-It solution, with one UK insurer having reduced the time from 70 days to one.