Organisational barriers hampering insurance customer service – Capgemini

Organisational barriers – such as insufficient access to data (54%), legacy systems (51%) and a lack of skilled talent (47%) – are preventing insurance firms from excelling at customer service, according to new research from information technology company Capgemini.

Its World property and casualty insurance report 2024, published on 17 April 2024 by in-house think tank The Capgemini Research Institute, identified these internal drivers as possible reasons why 27% of policyholder respondents looked to switch their insurer in the last two years.

These policyholders sought lower premiums (60%) and better coverage (53%).

Capgemini’s report is based on data from the 2024 Global Insurance Voice of the Customer Survey, the 2024 Global Insurance Executives’ Survey and the 2024 Global Insurance Underwriters’ Survey.

These surveys cover 18 markets, including Australia, Belgium, Brazil, Canada, France, Germany, Hong Kong, India, Italy, Japan, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, the UK and US

Data proficiency

Capgemini’s report additionally cited artificial intelligence (AI) and data as further challenges affecting insurance firms delivering for their customers.

For example, 83% of property and casualty insurance executives said that predictive models are critical for the future of underwriting – but only 27% of these respondents’ firms have advanced capabilities in this remit.

Furthermore, although 62% of executives recognised that AI and machine learning are improving underwriting quality and reducing fraud, only 43% of the underwriters surveyed trust and regularly accept automated recommendations from decision-support predictive analytics tools.

This is because of perceived overcomplexity (67%) and concerns over data integrity (59%), the report explained.

Capgemini added that insurance firms value data, such as that collected from drone images or connected devices, however few businesses are properly equipped to handle this type of information.

In turn, this can lead to issues such as incomplete risk evaluations – which impacted 77% of the report’s insurer respondents – as well as inconsistent underwriting decisions, which was a problem for 70% of the insurers polled.

Limited pricing accuracy due to insufficient data capabilities was identified as a challenge by 73% of insurer respondents too.

Modernisation

Adam Denninger, global insurance industry leader at Capgemini, said: “Today’s insurer is operating in one of the most precarious environments in recent memory. The industry must react to this volatility by rethinking the underwriting rule book.

“It requires shifting away from legacy models by modernising core systems and deploying advanced technologies that drive better outcomes and transparency.

“Embracing AI-driven insights and automation is crucial for the industry to drive a competitive path towards underwriting profitability that adapts to evolving risk dynamics and policyholder behaviours.”