• Souma Basu
  • Published: 05 September 2023


Property and casualty insurance is undergoing a revolutionary change driven by recent technological and data-analytic advancements. With global premiums expected to soar to $10 trillion by 20301, carriers are enacting innovative approaches to risk prevention, leveraging data-driven strategies, applying sustainable practices, and exploring new distribution channels like embedded insurance. 

From the increasing use of automation and the Internet of Things (IoT) to the impact of data analytics and sustainability initiatives, these advancements are transforming the insurance industry. They are also increasing efficiency, profitability, and improving the overall customer experience. Below are four of the most impactful trends in the P&C space.

In the post-pandemic years ahead, it will be pivotal for insurers to invest in building new relationships with customers through hyper-personalized offerings, delivered at just the right time in just the right way. Partnerships between insurers and external parties will facilitate creative solutions in both product scope and market reach. Carriers should be refining the capabilities required to simplify data exchange and the flow of digital interactions across the ecosystems that are a strategic focus for the industry. At the same time, insurers will have to be careful about their ESG responsibilities, as new-age customers are very aware of the environment and the contributions that their insurers make towards its sustainability.

IoT : The New Horizon in Insurance

Integrating modern technologies is revolutionizing risk prevention. The Internet of Things (IoT) encompasses a vast network of devices, objects, and sensors embedded with software and connectivity capabilities. The devices collect and exchange data without human intervention to enhance risk assessment. Real-time automated IoT sensors and warning triggers within devices like smoke detectors can alert potential hazards and minimize losses2.

Elsewhere, geospatial technology is being used to enhance risk assessment, improving rating accuracy and profitability in underwriting. Utilizing this data allows insurers to identify risks better, and proactively reduces false claims. Proprietary programs that use quant functions – computer programs that use mathematical models to analyze and assess risk across large amounts of data – enable clients to model risk more effectively, replacing traditional human judgment. 

Furthermore, one new development in risk prevention is emotional intensity mapping. This approach allows carriers to understand, anticipate, and address customers’ emotional responses more accurately, helping companies match their products and services to individual needs and preferences. 

Another advancement is the adoption of panoptic personalization. Panoptic personalization utilizes comprehensive consumer data, including demographics, behaviors, and interactions, to provide customers with personalized offerings.   

Data-Driven Approach for Operational Optimization

Data analytics has streamlined significant functions in the insurance value chain, such as fraud detection, subrogation, settlement, loss reserves, activity tracking, and litigation management. By capitalizing on the power of data, insurers can enhance their customer acquisition and retention, improve risk assessment, prevent fraud, reduce costs, personalize offerings, and optimize internal processes. 

For example, the claims space within the insurance industry is consistently fraught with legal intricacies and sensitivity, primarily because it represents one of the most significant challenges for policyholders to navigate for both physical and mental reasons. However, through the development of intelligent and automated systems, more insurers are opting to highly automate their claims processes. For instance, when a claim is submitted, a sophisticated algorithm assesses factors such as magnitude, cost, location, and other pertinent variables. Subsequently, certain programs autonomously assign the most suitable claims adjuster based on valuable data points. This strategic approach not only streamlines the process but also ensures alignment between adjusters and claimants, and significantly enhances the overall customer experience. 

The use of data-driven approaches is rapidly fostering evolution in the insurance landscape. Machine learning (ML) algorithms analyze various data sources to assess carrier risk, reduce human error, and streamline claims processes. Companies are experimenting with AI language models to identify patterns, anomalies, and behaviors in data, allowing for the holistic evaluation of scenarios, probability assessment, and outcome predictions. Property and casualty insurance carriers are using natural language processing (NLP) and natural language generation (NLG) models to detect and report fraud; for fraud detection, they are using Supervised ML Models by training system with labeled data, while NLG is being used for internal (generate internal reports to increase operational efficiency) and client facing operations (generate messages for targeted marketing). 

As huge and varied data stores become available to insurers, they will increase the use of data analytics, predictive modeling, and proprietary risk assessment models. This will help improve insurers’ embed straight-through-processing, reducing human intervention and time for writing a policy and enhancing operational efficiency.

AI has gone mainstream and is no longer a 'nice-to-have' embellishment that speeds up claims processing or animates chatbots. It is no great leap to envision deeper integration of AI into insurance servicing, risk algorithms, and fraud detection. There is the risk of bias and discrimination – unconscious or otherwise – carrying across from the underlying datasets on which AI models are trained. 

Towards a Sustainable Future

A two-fold dynamic is starting to rise within the economy, particularly at insurance companies. The demographics of the insured population is changing. An increasing number of Millennials and Gen-Z’ers will be primary policyholders in the upcoming years, and a quality that both generations value is sustainability. A study conducted by First Insight states that Gen-Z shoppers prefer sustainable brands and are willing to spend up to 10% more, while both Gen-Z and Millennials are the most likely to base purchasing decisions on a targeted company’s values and principles (personal, social, and environmental) 

Another facet that strikes insurance companies even harder is the rise of natural catastrophes. The Swiss Re Institute estimates insured losses from natural catastrophes, which have risen at an annual rate of 5% to 7% since 1992, will continue at this pace. As the state of catastrophes worsens, we can expect more insurers to leave catastrophe heavy states3. Most recently, insurers have left states like California and Florida due to catastrophes causing them to reach insolvency.

Finally, reporting requirements for sustainability are rising. In 2022, the SEC proposed to regulate climate risk disclosures in areas like changes in underwriting practices, rethinking targeted advertising, ESG disclosure policies, and more. We can extrapolate that the SEC will suggest increasing scrutiny over long-standing industry practices, transparency, and investments. Insurers who have not yet instituted ESG will find themselves lagging, as they will need to quickly adapt their underwriting, investment, advertising, and disclosure strategies to align with potential legislation.   

ESG investments are a win-win for carriers: they boost the company’s public image while addressing customer concerns, regulatory requirements, and commitment to social causes. Insurers such as AIG have woven ESG into their underwriting, investment practices, and operations by incorporating the goals of stakeholders (clients, distribution partners, and others) and finding the best way to help them to achieve these goals4. Additionally, the European Insurance and Occupational Pensions Authority (EIOPA) has worked to set expectations for insurers and pensions funds. This has had a good response due to climate change being a prevalent force, and how alleviating and handling ESG Risks can help. 


Embedded Insurance 

The growth of embedded insurance presents a viable growth opportunity for insurance companies. Embedded insurance allows integration at point-of-sale through products and services; for example, bundling auto insurance with a new car purchase or buying damage protection insurance by purchasing a new cell phone or other online merchandise.

One of the most powerful offerings that insurance companies have are their partnerships and sponsorships. Insurers like Root Insurance, an InsureTech startup, are working with Carvana to embed its auto coverage along with the sale of used vehicles. There are other similar examples.  At Best Buy, when a customer purchases a new television and chooses to buy insurance coverage, the insurer can partner with Best Buy to facilitate the insurance coverage. This collaboration enables insurers to expand their portfolio and attract new business applications. In another business model, original equipment manufacturers (OEM) can offer insurance with their products, like Tesla. When customers buy a new or used Tesla from an authorized dealership, they can also purchase insurance from Tesla at the point of sale. This insurance is currently available to 12 states across the US and is expected to grow. 

Both buyers and sellers benefit by way of reduced risk mitigation. Instead of vertically integrating and directly selling consumer goods, insurers can opt for partnerships and sponsorships. In return for this collaboration, insurers can share a small percentage of the premium gains from the partnership. This approach mitigates the risk associated with entering an unfamiliar product development space and allows insurers to offer their products to a broader range of potential customers.

There are other players too in the embedded insurance ecosystem.  Insurance tech companies like Sure, an insurance technology company that has launched its own product Retract, will help online retailers offer insurance for selling products online. Other coverages include capabilities for online merchants to provide customers with return shipping protection at the point of sale to cover the cost of returning goods.


2023 started on a difficult note for the P&C insurance industry in the US, as insurers faced a difficult market cycle primarily due to historic high inflation, supply chain disruptions, and natural catastrophes. Premiums are on the rise, especially in the commercial insurance space. There is a lot of cost pressure on insurers to be competitive and retain their market share. Technology adoption is a significant means by which insurers can reduce operational expenses, reduce loss by detecting and preventing fraud, predict catastrophic conditions, and contain future losses. By harnessing these technologies and staying ahead of emerging trends, insurers can streamline their operations and provide forward-looking, customized solutions that best meet their customers’ needs. For the Property & Casualty space, embracing these innovations will be vital for insurers aiming to enhance their processes, remain competitive and have lasting success. 



1 Global insurance premiums could reach $10 trillion by 2030 | Insurance Business America
2 Capco’s US Insurance Survey 2023
3 Continued high losses from natural catastrophes in 2022 | Swiss Re
4 AIG Environmental, Social and Governance Report (2022)