Property & Casualty: A Changing Landscape
Shifting risks and evolving strategies for P&C insurers.
P&C insurance overview
In the current insurance landscape, insurers are confronted with a multitude of factors that are significantly impacting their operations. Economic and social inflation and convective storms are major cost drivers in property and casualty (P&C), impacting both personal and commercial line companies. These diverse elements contribute to a myriad of consequences for the industry, such as profitability challenges, price increases for customers, reinsurance rate hikes, and limitations on insurance capacity in certain markets or geographic regions. As insurers strive to maintain financial stability and deliver excellent service, they need to account for these complexities and develop adaptable strategies that strike a delicate balance between offering competitive premiums and safeguarding their bottom lines.
Many companies are currently looking to enhance their models and analytics by utilizing AI and incorporating new data sources. This is being done to improve efficiency, reduce the reliance on expert manual work, and drive more informed decision-making, leading to improved profitability.
Ian Sterling
Actuarial Principal, KPMG LLP
Key drivers influencing the P&C insurance industry:
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Seizing opportunities with tech and data in insurance
In response to evolving challenges in the insurance industry, transforming the operating model is crucial. Leveraging technology and data, including advanced analytical modeling and innovative digital solutions, empowers insurers to enhance efficiency, make informed decisions, and adapt adeptly. This shift equips insurers to navigate complexities, respond to market changes, deliver value to customers, and address challenges posed by high jury verdicts. With a heightened reliance on technology, firms are incorporating artificial intelligence (AI) and integrating new data sources to further enhance business models and analytics. For example, machine learning models have been used to identify granular segmentations of profitable/unprofitable business, which has led to
re-underwriting and profitable growth. Also, many companies are exploring broader use of machine learning claim level modeling to refine the reserving process to be more responsive to changing trends and drive more insights, as well as similar models to enhance claim strategies around litigation. It is imperative for companies to use these measures more to reduce loss ratios and mitigate risks in the P&C sector.
Tackling emerging risks in the industry:
P&C insurers are constantly evolving to keep up with new threats and opportunities that emerge with advancing technologies and changing social, economic, and environmental landscapes. Here are some of the emerging risks that insurance carriers need to be aware of and prepared for:
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In response to the changing landscape, insurance carriers must continue to adjust and innovate their products and services to keep pace with the evolving market. Keeping a forward-thinking approach and investing in technologies, advanced analytical modeling, and risk management strategies will be crucial to future growth in the industry.
This information was originally presented at the KPMG 35th Annual Insurance Industry Conference.
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Property and casualty: A changing landscape
Shifting risks and evolving strategies for P&C insurers
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