‘Dynamic pricing is swiftly becoming a standout trend in the insurance industry,’ says Janssen. ‘By using real-time data to update insurance product prices, this modern method allows you to offer hyper-customised rates. This shift enables insurers to immediately respond to market fluctuations, changing customer behaviours, and competitor pricing.’
Van Buuren adds, ‘Insurance firms should prioritize integrating dynamic pricing in their pricing strategy to stay ahead of the market. Without it, companies risk losing their competitive edge. Our global benchmark reveals that markets worldwide are adopting dynamic pricing models. The trend is observed in advanced pricing markets like the UK, Italy and Switzerland and increasingly in the Netherlands.’
‘Speed-to-market is what makes the difference between a successful and disappointing product. While customers value stable prices, experience proves that offering tailored market pricing is more lucrative. That means that as an insurer you become more profitable by implementing dynamic pricing due to its flexibility and responsiveness,’ continues Van Buuren. ‘We already observe dynamic pricing in many other sectors, like airlines, hospitality and e-commerce. In the Dutch insurance market dynamic pricing is expected to grow further as insurers enhance their data, modelling and governance flows.’
Janssen concludes ‘At PwC we have quite a bit of experience in refining insurers’ data landscapes and organizational processes to effectively support upcoming technological investments. For example, Many of our clients want to implement dynamic pricing, but we but they find their data scattered across the company, or lack the organizational structure to quickly act on new information.’
Specialised tools facilitate enhanced analyses
Van Buuren notes, ‘By extension, we see a significant trend towards the implementation of specialized modules. Not only by increasing speed-to-market, but also for facilitating advanced analyses. The study shows that analyses for customer demand elasticity and customer lifetime value are being performed in an increasingly mature way.’
Janssen adds, ‘In technical pricing we also see that technology promotes the use of machine learning, such as Neural networks and Random Forests, for feature identification. Though traditional statistical models like GLMs and GAMs also remain relevant, especially for lower-volume, lower-premium products, and riders.’
Local differences and regulatory outlook
‘The final composition of the technical pricing model is highly driven by local effects,’ Janssen continues. ‘Our Global Pricing Benchmark 2025 highlights significant variations between markets, affecting the types of data permissible in pricing algorithms. For instance, the regulatory perspective on use of gender in risk factors varies widely across markets. The European Union banned the use of gender in insurance pricing in 2012, whereas it is a very significant factor in the Swiss market.’
Van Buuren elaborates, ‘We also see these local differences in the use of telematics data. This is data collected through the integration of telephone or IoT (Internet of Things) such as GPS technology and onboard diagnostics. In many markets there is a growing adoption of telematics information. In some cases, up to 70% of new business is fueled by telematics.’
‘Local variations are partially driven by regulation, with differences in rate filing, the regulatory approval process of prices, being the most prominent example. However,’ Janssen adds, 'in Europe, with a limited tradition of rate filling, we see regulators making impactful shifts too. European regulators are emphasizing the importance of product governance and fair pricing.’
'Insurance pricing is required to meet the needs of customers without excessive margins or low claims ratio,' Van Buuren concludes. ‘Evidence that this is embedded in the pricing process and demonstratable in the rates is key to avoid discussions.’
A benchmark for the future
The Global Pricing Benchmark provides not only a snapshot of current industry practices but gives you as an insurer a glimpse into future directions. From tools and team structures to regulatory expectations and pricing governance, the study offers a thorough overview of how you can gear up for the future.
However, the true value lies in putting the insights into the practice of your business. How can you prepare your organization for dynamic pricing implementation? How will you guarantee meeting regulatory expectations? How will you choose the optimal pricing model? Every market is different, and every insurer faces unique challenges. That’s why we invite you to explore the benchmark with us and discover what it could mean for your business.
Contact our team to access the full benchmark and explore ways to future-proof your pricing approach.
