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How to Become More Profitable in P&C Insurance

  • 4 min read

Value creation is vital for any healthy organization’s existence. Unfortunately, to date, the P&C insurance industry, particularly on the carrier side, is failing at that basic tenent. This short article explores the benefit that Real-Time insurance collaboration brings to improving profitability and creating value for investors.

Establishing a baseline is McKinsey’s “Global Insurance Report 2022” by examining the productivity stagnation in P&C insurance they observed: “As a result, economic profit—that is, profit after cost of capital—in the insurance industry is practically at a standstill.” And “Insurance barely earns its cost of capital, making investors skeptical.”

“Insurance barely earns its cost of capital…”– McKinsey

Further to those observations is our own research that shows non-claims expense ratios that have completely flat-lined over the past 10 years. This is despite the obvious attempts at modernization and spending in technology.

There has been a slight shift in the industry where intermediaries (brokers & agents) are slightly more profitable than insurers. However, from an industry perspective, there has been no improvement in overall productivity.

Real-Time Insurance Changes Everything

Real-Time insurance is driven by a cloud native shared platform underpinned by robust automation for all stakeholders in the insurance distribution vertical. Insurers who adopt Real-Time will see an increase of at least 80% in underwriting profit. Intermediaries will see even greater improvements in profitability of over 100% on the policies written in Real-Time.

Insurers and brokers will see increases in profitability of 80% to over 100% upon adoption of Real-Time insurance.

The industry has never seen such potential for dramatic improvement in its history. The few that adopt early will see the greatest improvement and hence VALUE CREATION for their investors over the rest of the industry.

What Makes this Value Creation Possible?

There are two main reasons why this is possible:

Firstly, Insurance has not embraced automation. Studies have shown that automation will have a tremendous impact on insurance.

Everything from underwriting to policy assembly on the carrier side to quoting, data gathering and customer service on the intermediary side. 73% of all non-claims expense is for compensation. These expenses relate directly to the lack of automation within the industry as well as the additional costs of coordinating customer fulfillment between multiple stakeholders in the insurance distribution vertical.

Secondly, collaboration is baked into Real-Time. Real-Time, by definition, is a collaborative effort because it occurs between at least two or more stakeholders. Current solutions are created for either insurers or brokers but since insurance is such a collaborative effort, the best solution will be something that works for both brokers and insurers. Automation is key, but a Real-Time platform removes barriers and facilitates communication and information transfer.


Implementing Real-Time is quick and can occur without impacting current operations. For insurance intermediaries the process is almost immediate. For insurers the process is more involved as products have to be enabled in the Real-Time environment. After which, insurers will be able to quote, assemble policies, issue, change and renew in Real-Time without any manual intervention.

Significant Milestones

In the article “Insurance Productivity 2030: Reimagining the Insurer for the Future”, McKinsey imagines how insurance might look in 2030 including:

  • Omnichannel support that allows customers to switch seamlessly between self-service to advice from an agent and vice versa
  • Improved guidance on next best products [and coverages] to recommend
  • Online portals available for customers who need to manage their policies after they’ve made purchases
  • Automated underwriting of the bulk of insurance products
  • Policy issuance process without any manual interventions
  • Customers will receive policies through online portals or other digital channels that will reduce the need for paper mail compared to today
  • Most or all routine tasks will be fully automated, speeding the resolution of back-office tasks for the customer and eliminating boring, routine, manual work for employees

It leaves us pondering why anyone would want to wait until 2030 to see what can already be done today in Real-Time.

For a complete demonstration of Real-Time click here.