After more than five years of hard market conditions, the insurance sector is now shifting into a soft market. This shift means firms will need to change their strategies to ensure they can stay competitive and profitable. Quantexa VP Insurance Alex Johnson believes Contextual AI and Decision Intelligence is the key to achieving this.
Profitable growth can be elusive during a soft market. Insurance organisations are faced with a catch-22, to grow their premiums and drive their competitive market share but also protect margins.
Johnson explained the soft market puts increased pressure on underwriters and decision-makers to accept policies quicker, be more responsive to customer needs and be proactive in finding more business to help grow market share. “That does create a bit of a paradox, especially when those teams are working with incomplete information and incomplete data, and when you couple that with the volatility that we know exists in the market,” he said.
External factors, such as inflation, geopolitical instability, climate risk and evolving customer behaviours, are making the underwriting and distribution process more complex. While these factors have always been present, they currently feel more unpredictable and more severe. All these factors are impacting margins and profits, making claims severity harder to understand. Without complete data, it becomes extremely difficult to adapt.
Johnson added, “We’ve seen that insurers do face a tough time in a soft market even with strong capital reserves. Often that data is fragmented and can lead to them being data rich, but insight poor when it comes to making smart underwriting decisions.”
To solve this, Quantexa encourages firms to balance risk versus reward efforts by grounding their underwriting and distribution decisions on a rich and connected dataset. For instance, high-quality data helps underwriters spot risk concentrations and portfolio links, such as supply chain relationships. These insights are vital in the current complexity of the market.
The power of contextual AI and decision intelligence
Despite firms spending millions on replacing legacy systems with updated technology, fragmented data remains an issue, even in next generation systems.
Unfortunately, teams, product lines and regions all have their own objectives and so data silos can just spring up naturally. Johnson described these silos as the “silent killer of efficiency”, leading to duplicated workloads, inconsistent decisions and a breeding ground for errors. For instance, one underwriter might leverage certain data on a particular case and get one answer, while another underwriter arrives at another. “It’s making it hard for insurers to respond in an agile way to these market challenges.”
To overcome this, organisations are looking to create a foundation of connected insights that can traverse those business silos to connect everything together, whether that is distribution, underwriting, claims data, or regional activities and product lines.
“We’re seeing organisations lean into solving those problems by creating unified views of truth through techniques like Entity Resolution and Graph Analytics to help them work off a single source of truth and identify hidden risks and opportunities that generally just get missed because data is being treated in silos.
“We’ve seen that fragmented data is a challenge irrespective of legacy infrastructure and any insurer at any point in their technical maturity needs to be thinking about this,” he said.
There is a huge promise around AI and while it is being adopted across insurance, Johnson believes it is typically being reserved for low level problems, such as transcript summarisation or writing emails. This might create some efficiency gains, but the real value comes from supporting mission critical decisions, such as pricing or claims payouts.
This is where contextual AI and decision intelligence comes in, connecting that internal and external data to help insurers make smart sales, distribution, underwriting and claims decisions from a single source of information.
At the forefront of this is Quantexa’s Decision Intelligence platform, which leverages data fusion AI and knowledge graph AI to collate and unify data and present it in easily digestible visualisation and insights. Its technology can connect billions of records on-demand to give holistic views of people, places, risks, properties, vehicles, and assets.
“Unlike traditional CRM systems, underwriting workbenches or admin platforms, Quantexa is accessing multiple systems and multiple views of data and using our patented analytics to not only show who someone is or what a risk is, but why it matters and the context, both historical and active,” he said.
This allows insurers to better assess risk, even when they are accepting more of it. But it also means they can become much more proactive, improving their triage and pre-underwriting capabilities so even before a submission comes in, a firm knows whether they would accept the risk. It can also help insurers expand into new markets, identifying coverage areas, regions and products that drive growth even in a soft market.
Johnson added, “Decision intelligence is helping underwriters and risk teams focus on the strategy of decision making as opposed to the act of data interpretation or data assessment. Some of our customers have seen 10 to 30-times faster completion of risk assessment, and they’ve seen 75% automation and pre-underwriting.”
Boosting business and reducing loss
During a soft market, cross-selling, upselling and bundling can be easy ways for an insurer to increase their margins, without needing to capture more customers. Decision intelligence excels at finding the connections and hidden insights to increase the chance of success. As such, Quantexa’s customer analytics shows users what a customer is likely to buy, as well as the likelihood of major claims or churn that would impact margins. It can even provide insights into producers to identify who would be best to support the cross sell/upsell process.
“Customers are seeing they can generate faster income through this. One of our Tier 1 customers generated over £200m of additional income through our customer intelligence solution.”
The addition of contextual AI on top of decision intelligence also provides insurers with on-demand risk profiles and real-world contextual views of data, Johnson noted. This empowers them to make faster risk acceptance decisions, improve leakage assessments, fraud prevention, segmentation, litigation prediction, supplier analysis and more. This technology has helped Quantexa’s clients dramatically, with Johnson highlighting one client that improved loss ratios by 3% and another that is using the technology to support over six million claims per year.
“A lot of the decision making is made even before the event occurs, so being not only reactive when a claim occurs, but also actually before a claim comes in. The power of contextual AI is giving you sight across that value chain and it’s giving you the underwriting and claims precision in a way that can be reused and repeatable.”
Looking ahead, Johnson is excited about the adoption of AI across insurance, but the technology will only produce the best results if it can access a trusted view of the complete dataset. “There is huge potential with the latest generation of AI tools, but I would encourage insurance companies to think about how they get the foundations right to power their future growth.”
Quantexa was recently named in the eighth annual InsurTech100, a list that highlights the must-know companies in the sector. Read the full InsurTech100 list here.
Read the daily FinTech news
Copyright © 2025 FinTech Global