The Con in Control

Note: This post was drafted before the fires that swept Southern California. In hindsight, it seems oddly prescient.

When we read the obligatory predictions for coming years in insurance trade articles and consultancy reports, we like to look for themes. Those themes are most often found between the lines of the text in the article and reports. This year is no different. Here’s what we mean.

According to an article in Risk & Insurance — “The State of the Insurance Market: What’s in Store for 2025” — there are some challenges ahead. We can’t remember a year in which there were no challenges. But let’s get to them:

Catastrophic property loss and auto lines bring considerable challenge to the market as historic loss levels continued to plague 2024 … Catastrophic events have also been linked to inflation and rising costs, including interest rates and supply chain issues, which further impact overall insurance costs.

To paraphrase, catastrophes are likely to occur and to be problematic.

Next, in its report, “Insurance 2025 and Beyond”, PWC wrote:

Continued rapid advancements in digital and analytics capabilities, from inside and outside the industry, have put many players under pressure. We’ve seen a sharp increase in digital efforts and adoption in areas like distribution, operations and claims. However, insurers still lack speed and agility due to inherent complexities such as legacy systems and traditionally siloed operations.

The report cited five specific factors on which to keep an eye:

1. A widening trust gap
2. Rapidly evolving customer needs
3. An increasingly digital and AI-driven world
4. Climate risk and a focus on sustainability
5. Convergence, collaboration, and competition.

To paraphrase again, relationships, consumer desires, technology, weather, and players in the market bear watching.

Finally, we looked at a report from Willis Towers Watson — “Insurance Marketplace Realities 2025 – Casualty” — that said this:

Casualty liability lines claim frequency and severity drive up loss ratios and subsequent premium while workers compensation results continue to mitigate those of liability and are leveraged accordingly. The marketplace is responding to increasing inflation and reserves while trying to competitively round out portfolios.

To paraphrase one more time, good news offsets bad in most property/casualty books of business. That’s the way the world and life work.

Let’s Connect Dots

Is there a unifying theme to be found by reading between the lines of these sources? Yes. In fact, it’s the same theme every year. That theme is uncertainty.

There’s a reason the expression, “There are no guarantees,” is a cliché. Given the truth of that expression, the notion or suggestion of control is a con, a source of deception. The truth is we control precious little. Rather than control or clairvoyance, the key to long-term success is preparedness.

To be adequately prepared, core system vendors should be digitally flexible enough to incorporate technical change and to integrate systems and data sources that suit their business models and provide discernible value to their customers.

That kind of preparedness is exactly what we mean when we say the Finys Suite is future-proof.