Six key challenges for Non-Life insurance pricing

In today’s increasingly competitive and regulated insurance markets, the role of the pricing insurer has expanded significantly beyond pure technical pricing.

Non-life insurance pricing is not only about ensuring that premiums are adequate and competitive, but also aligned with the company’s risk appetite and financial objectives.

In practice, the insurance pricing is recognized as a core yet complex function that many insurers struggle to fully integrate into their broader business and strategic decision-making processes.

Drawing on more than 30 years of global experience, we have identified six key pricing challenges that are common to all types of non-life insurance companies:

• Strategic alignment: Bridging the Gap between Pricing and Strategy
• Ensure an efficient premium calculation with a comprehensive pricing process
• Dynamic pricing: mastering agility and strategy beyond GLMs
• Investment in Pricing Tools – Beyond Case-by-Case Tariff Redesign
• Mitigating ‘Key Person’ Risk: Investing in comprehensive team training
• Benefit from Big Data and Artificial Intelligence while keeping your traditional actuarial methods

Read our article to find out more about each of these challenges.

Non-life insurers face the challenge of bringing together complete and reliable data to build accurate premiums. They must also correctly understand risk profiles and how customers react to price changes. Finally, pricing and risk monitoring need to be aligned with commercial objectives to support growth and profitability.

Insurance pricing is a key function for non-life insurers and involves complex processes and many stakeholders. A major challenge is structuring the pricing process, from data processing and analysis to risk modeling, premium definition, and iterative validation. Having a comprehensive pricing process is difficult but essential to ensure accuracy, consistency, and alignment with business objectives.

Non-life insurers face the challenge of bringing together complete and reliable data to build accurate premiums. They must also correctly understand risk profiles and how customers react to price changes. Finally, pricing and risk monitoring need to be aligned with commercial objectives to support growth and profitability.

For pricing insurers, another key challenge is building competitive resilience by adopting the right strategic tools. They also need to leverage technology solutions and AI while remaining regulatory compliant and supporting effective pricing decisions.

Pricing insurers may face talent shortages and “key person” risk. This creates the challenge of building robust processes and developing the technical skills needed to complete the entire pricing cycle. It also requires strategic investment in human capital to attract and retain talented professionals.

The smart way to build a robust pricing framework is to balance experience with technological innovation such as Big Data and artificial intelligence. The challenge is to benefit from both worlds without replacing traditional actuarial methods. This includes leveraging data scientists alongside actuaries to enhance pricing accuracy and decision-making.

If you’d like to delve deeper into insurance pricing strategies and tools, check out our website’s resources section for additional content!