Technology and the Soft Property/Casualty Market

by Donald Light, November 24, 2004

Abstract

San Francisco, CA, USA November 24, 2004

The property/casualty cycle is turning, prices are softening, and underwriting results are likely to deteriorate. Celent believes that technology offers insurers (if not a cure) a way to ease their pain— and perhaps gain a competitive advantage along the way.

In a new report, , Celent points out that though the rising tide of the 2002–2004 hard market lifted all underwriting ships, it became apparent by the second half of this year that the tide had turned and prices were softening.

"In response, each insurer will have to rely on its own blend of business processes, enabling technology, and execution skills," comments

Donald Light, senior analyst in Celent's insurance group and author of the report. "The good news is that currently available technologies will support optimal business processes and superior execution in pricing, claims, and reinsurance programs. Taken together on a foundation of data mastery solutions, these technologies provide insurers with a real chance to counter the effects of a softening market."

The report explores how an insurer can use technology to lessen the underwriting cycle’s impact and to gain at least a relative competitive advantage. It looks specifically at three core processes that arguably have the biggest impact on underwriting results: pricing, claims, and reinsurance. The report also identifies specific kinds of technologies and vendors for each of these areas and suggests how insurers and vendors should respond to the changing market conditions.

This 26-page report contains seven figures and eight tables. A

table of contents is available online.

of Celent Communications' Property/Casualty Insurance research service can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

Send mail to info@celent.com with questions or comments about this Web site.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

San Francisco, CA, USA November 24,  2004

Technology and the Soft  Property/Casualty Market

Return to report Abstract

 

EXECUTIVE SUMMARY 3
INTRODUCTION 4
THE UNDERWRITING CYCLE 5
  Underwriting Profitability 5
  Cyclical Results 5
  The End of the Underwriting Cycle? 8
  The Right Tools are Available 9
GETTING THE RIGHT PRICE 10
  Ignorance of the Correct Price 10
  Lack of Accurate or Complete Information 12
  Competitive and/or Organizational Pressures 13
  Efficiency: (Kind of) Straight-Through Processing 14
ADJUSTING CLAIMS CORRECTLY 15
FINDING REINSURANCE VALUE 20
CONCLUSIONS 23
  For Property/Casualty Insurers 23
  For Technology Vendors 24
OBJECTIVITY & METHODOLOGY 25

Sign in to download reports and access personalized information