The landscape of the insurance industry is undergoing a profound transformation, driven by rapid technological advancements.
Hyperexponential, an InsurTech that is transforming pricing decisions, has released a new whitepaper for US firms deciding whether they should build or buy their framework for insurance pricing transformation.
As carriers strive to remain at the forefront of competitiveness, the push for digital transformation has become more urgent than ever. Among the various facets of this digital shift, pricing stands out as a critical area for innovation. Research conducted by McKinsey highlights the significant impact of pricing transformation, suggesting that it can enhance combined ratios by as much as 6 percentage points.
A survey conducted among Specialty and Commercial insurers in 2023 revealed a striking insight: 83% of respondents acknowledged the need for enhancements in their rating and risk assessment technologies. This statistic raises an important question: how should insurers proceed to upgrade their pricing capabilities effectively?
The journey towards pricing transformation is unique for each carrier, influenced by an array of factors such as initial conditions, available resources, strategic goals, regulatory environments, and timelines. This diversity necessitates a careful evaluation of the alternatives: developing bespoke rating software in-house or forging partnerships with external vendors. Opting for the most appropriate strategy necessitates a detailed examination of one’s business objectives and priorities.
The whitepaper delves into the strategic considerations that insurers must navigate when deciding between building their own solutions or collaborating with vendors. It also introduces a structured framework designed to aid in the impartial evaluation of each option, ensuring that insurers can make informed decisions that align with their long-term business goals.
Read the full whitepaper here.
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