Why the Insurance Industry Needs Decision Platforms

The insurance industry is at a crossroads. It has come a long way in terms of digitizing many of its processes, particularly in underwriting and pricing, and claims assessment. Decisioning platforms have been central to enabling this move away from static, rules-based underwriting models, and leveraging AI and automation to reduce claims handling times.

Despite this progress, however, our research shows a significant gap in confidence among insurance executives. Less than one-quarter are confident in their ability to make real-time, analytically proven, customer-centric decisions.

Insurers are still grappling with fragmented processes and legacy systems. Plus, digitalization is exposing insurers to great levels of fraud. Preventing fraud without compromising seamless customer experiences is a major challenge. Regulatory compliance is another hurdle, with insurers needing to adapt to evolving rules around artificial intelligence transparency, climate risk disclosures, and fair pricing.

In order to achieve confidence and remain competitive, insurance organizations must be able to easily drive efficiency, profitability, and customer-centricity.

The key to this is decisioning platforms. Across various sectors, these tools are proving to be invaluable. Within the insurance industry, their value can extend far beyond their current use. Done right, these platforms will be game changers for the insurance organizations that embrace them.

The Challenges Created by Years of ‘Iterative’ Progress and Technical Debt

Much of the lack of confidence highlighted by FICO’s global research has come from the ‘iterative’ deployment of digital transformation strategies over the last few years, rather than large-scale ‘rip and replace’ digital transformations. This is because of the constraints that come with legacy systems.

While in most cases, the industry’s key processes have been digitized, this has been to varying degrees depending on business model and geography. The biggest gains, for example, have been in high-volume products like motor and home insurance. However, commercial insurance and niche personal lines continue to lag due to their complexity. And while many insurers may have online claims submission forms, much of the processing in the background remains manual.

Geographically, digital onboarding in the UK has been well-established for years, whereas claims digitization has only recently become a priority. In markets such as Europe and the US, the continued reliance on intermediaries—agents, brokers, and banks—has slowed progress toward seamless digital customer journeys.

The key challenge for insurance organizations has been extending digital transformation across all product categories, without introducing inefficiencies and affecting the customer experience.

Many firms have launched digital sub-brands to bypass legacy constraints, but this has created additional silos. According to FICO’s global research, without a unified digital decisioning strategy, 65% of insurers are struggling to respond quickly to market shifts, 47% optimize decision effectiveness, and 35% achieve a holistic view of customer journeys.

Full automation and customer-centric transformation, therefore, have remained elusive, while the ultimate goal of achieving a ‘straight-through’ claims process is still a work in progress.

Enabling Tailored Services at Scale - Composability and Reusability

Playing a crucial role here are composability and reusability, and they being made possible by decision intelligence platforms.

Composability, like Lego bricks, is where decisioning components can be configured into tailored solutions for different use cases without extensive customization. This allows the right balance between automation and human interaction, ensuring that straightforward claims (e.g., a broken TV) are processed quickly while complex cases (e.g., severe car accidents) receive the necessary human oversight. This approach balances flexibility with maintainability, allowing insurers to scale efficiently while giving their customers the level of interaction needed.

The second vital element to this is reusability, which kicks in once a component is developed. The component can be repurposed for other applications, reducing development costs and accelerating time-to-market. For example, an underwriting process designed for motor insurance can be adapted for commercial insurance, incorporating additional data sources and underwriting policies.

This works well around the ‘iterative deployment’ approach that insurers have taken over the years, allowing them to roll out new capabilities incrementally, refine them, and expand their use across business lines. It eliminates the need to start from scratch with each new initiative, fostering agility and cost efficiency.

Closing the Execution Gap

Historically, insurers launched new products to market, only to find issues after they had gone live. The ability to rigorously test decision strategies before deployment has always been expensive and resource heavy, as has the ability to fix errors after deployment. It wasn’t unusual to see products withdrawn entirely after launch.

While artificial intelligence (AI) and machine learning have enabled data science teams to develop more predictive models (and much investment has been poured into this), many insurers are still struggling with deploying these models effectively. Execution, therefore, remains a challenge.

A lack of expertise in both the simulation and deployment of predictive models is to blame. FICO research shows that 85% of firms have simulation capabilities, but lack the expertise to use them effectively, while 80% report similar expertise gaps in AI and ML implementation.

Understanding the True Impact of a Decision – the Power of Simulation

Without extensive testing and real-time simulation capabilities, organizations will continue to find themselves at risk of costly errors. The ability to test and simulate is critical to enhancing decision accuracy and minimizing these risks.

This is where FICO’s decisioning platform is really changing the game for the insurance industry. The digital twins & simulation capability on FICO® Platform is empowering business users to easily stress-test assets, such as models, decision flows or complete decision strategies against changing market conditions or changes in the models themselves.

It allows evaluation of business impact in financial terms, rather than just technical metrics. Crucially, it is shifting control from IT teams to business decision-makers, enabling them to quickly assess business performance, compare alternative approaches, and adjust through rapid cycles of A/B or champion/challenger testing.

FICO customers that have embraced the platform are finding deployment times reduced from months down to hours, and in some cases even minutes. 

Future-Proofing Insurance with Intelligent Decisioning

Decision platforms are not merely tools, they are strategic assets that drive competitive differentiation. They must be embraced if the insurance industry wants to move to a more agile, customer-centric future, and drive faster, smarter and more profitable decisions.

Through composability, reusability and robust simulation capabilities, these platforms enable insurers to navigate complex challenges, from fragmented data ecosystems and evolving regulatory landscapes to the need for ‘personalized’ customer engagement and agile operational responses.

As we look ahead, the insurers that embrace these capabilities—those that combine the best of legacy systems with innovative, modular approaches—will be best positioned to capitalize on the inevitable rebound in industry fortunes.

It’s time for insurers to move beyond talk, to harness the full potential of AI, and to build a future where every decision counts.

How FICO Helps Insurers with Intelligent Decisioning

With FICO Platform, insurers get a complete end-to-end set of composable capabilities to address a wide spectrum of use cases across the customer lifecycle.

For example, for underwriting, insurers will have the ability to understand growth and risk trade-offs with an interface designed for both technical and business users to design then simulate scenarios before putting them into production. It will empower underwriters to modify rules in days, not months, helping insurers stay ahead of disruption and competitive threats.

In the context of fraud, decisions will be drawn from all critical real-time and other data sources to stop fraud before it happens. The use of analytics, AI, and machine learning will help detect the likelihood of first-party fraud, and decision outcomes can be monitored to reduce false positives and protect consumers from an ever-growing number of new, often undetectable threats.

For customer management, insurers will be able to fully automate this process alongside communications to improve uptake, secure payments, resolve fraud, handle complaints, and address other servicing needs at scale. It will enable a ‘360’ view of customers and deliver the right offers or treatments, through the optimal channel, at the right time.

Decisions can be automated with agility, accuracy, and transparency, through a business-friendly interface. Business teams will be able to seamlessly simulate, test, and deploy new strategies faster than ever, to keep up with market changes and new data. Both business users and analysts can build, execute, and improve analytic-powered decision strategies, at the scale and speed of disruption

With FICO Platform, the possibilities for insurers are endless.

Learn More about Decisioning Platforms

• Explore FICO Platform
• Read Gartner’s report, Market Guide for Decision Intelligence Platforms
• Discover our solutions for insurance
• Watch the video “FICO® Platform: Applied Intelligence, when and where it matters”
• See clients discuss their use of FICO Platform
• Watch FICO Platform in action with the story of everyday consumer Digital Jane