Combined ratio (claims + expenses divided by premium) is the number every insurer’s P&L answers to. S&P’s 2025 analysis of the US P&C industry found a net combined ratio of just under 93%, the best result in 19 years, driven by rate hardening and underwriting discipline.
But that tailwind is fading. As the market softens heading into 2026 and renewals and claims costs stay volatile, pricing discipline alone won’t keep the combined ratio at 2025 levels. The next gains will come from operational efficiency, and most insurers are still leaving money on the table in places they’ve stopped looking.
Here are five bottlenecks we keep seeing, and the numbers behind them.
1. Manual work is eating underwriting capacity
Capgemini’s research puts it starkly: underwriters spend 41 to 43% of their time on administrative tasks, such as data entry and record-keeping, and only 32 to 33% on actual risk assessment. That means underwriting capacity that should be spent growing the book is instead rekeying information a system should already have, and the combined ratio suffers as a result.
2. Claims leakage is bigger than the automation story
When modernising claims, most insurers focus on automation and speed when the bigger benefits can usually be found elsewhere. Take a hypothetical insurer paying out €100M in claims a year: a 1% detected leakage rate alone is €1M flowing out of the business. But research has found that insurers in fact see a value leakage of 8% to 10% on average on casualty and motor insurance claims, equating to an €8 to €10m loss. But by becoming a best-in-class player, with a higher-performing claims organisation, they can reduce this to 4% to 7% leakage – a significant saving.
3. Slow product and pricing cycles cost more than they look like they do
Customer behaviour and risk profiles shift continuously. Insurers that can reprice or launch a new product in weeks capture that shift, while those waiting on a quarterly development cycle, or longer, are continuing to write unprofitable business, simply because the system couldn’t keep up with the market. This isn’t a technology preference; it shows up directly in combined ratio due to out-of-date pricing that doesn’t reflect claims experience.
4. Fragmented data means problems surface too late
Real-time data is critical to running an efficient, profitable insurance business, but many insurers still rely on cumbersome data warehouses, centralised reporting teams and static dashboards. This centralised model means issues like claims inflation, deteriorating loss ratios or operational inefficiencies are frequently identified too late, allowing problems to grow while potential growth opportunities are missed – both of which have a detrimental impact on combined ratio.
The insurers narrowing this gap aren’t building better dashboards; they’re removing the reporting layer that creates the delay in the first place, so any manager can query the live data directly.
5. Disconnected systems create work nobody signed up for
Policy admin, underwriting, claims, CRM, finance. Most insurers run these as separate systems bolted together over several years. And while each one might work fine in isolation, the cost shows up in the gaps: through staff re-keying the same customer data three times, exporting reports to reconcile manually, and nobody trusting the “single” version of the truth because there isn’t one. These small tasks and areas of friction create a significant operational burden, which together add up to a big dent on profits.
The pattern underneath all five
None of these bottlenecks are new. What’s changed is that the market can no longer absorb them without feeling it on the bottom line. Softening rates mean the operational drag that rate hardening used to mask is now having a meaningful impact on the combined ratio itself.
The insurers making progress here aren’t necessarily replacing everything at once. Most start with the areas with the greatest room for improvement, often claims leakage, because the business case is the easiest to prove, and expand from there.
What’s the bottleneck costing your team the most right now — admin time, leakage, or slow-to-market product changes?
