hyperexponential, a pricing platform for global reinsurers, has observed that while new technologies have created significant opportunities, issues with the broader ecosystem and legacy systems are hampering innovation and limiting insurers’ efficiency, profitability and collaboration.

According to the company’s State of Pricing 2024 report, a full 96% of underwriters and actuaries believe their pricing technology needs improvement, up from just 84% in 2023.

At the same time, only 8% of insurers rely exclusively on traditional spreadsheets or Excel for pricing, demonstrating the widespread use of modern pricing platforms.

At the same time, 47% of Hyperexponential respondents say they are unable to achieve optimal pricing due to the integration of new and legacy technologies.

In addition, 51% believe their current technology does not meet the demands of a rapidly changing risk environment, and only 19% of insurers automatically incorporate external data into their pricing models.

“The net result of this lack of integration and failure to address broader pricing ecosystems is significant loss of efficiency, wasted hours of skilled labor and a lack of collaboration between the most fundamental cogs in the pricing workflow – insurers, actuaries and IT,” the company’s report said.

Insurers’ profits are also reportedly suffering: only 21 percent of actuaries and underwriters believe their current pricing technology enables them to make the best data-driven decisions, 45 percent see it as an obstacle to maximizing profitability, and 34 percent say it leads to lost business with competitors (up from 29 percent in 2023).

Amrit Santhirasenan, CEO and co-founder of hyperexponential, commented: “The insurance industry is increasingly having to catch up with technological change, while other large sectors dependent on traditional technology are showing that successful digital projects can be implemented much faster.

“The hype around AI is inevitable and the potential benefits are undeniable. But its true value can only be fully realized if insurers also get their own affairs in order.

“The reality is that the sector’s current pricing infrastructure does not have the capacity to support this technological innovation and that over-reliance on outdated, inefficient and ineffective processes and technologies is proving to be a major obstacle.

“The message from actuaries and insurers is clear. They want significant operational improvements. Manual tasks such as data cleansing and re-keying can be made easier with the right pricing technology and rich data sets.

“It can also create a more productive, collaborative and forward-looking environment, giving insurers a competitive advantage and enabling them to take advantage of groundbreaking technological innovations such as AI.”