Margins are shrinking. Expectations are rising. Old systems can’t keep up. Yet many execs stay focused on surface issues—more campaigns, more agents, more of the same. It’s not working. The pressure is coming from deeper places. That’s why we built the Pressure Capsule—a model that maps out the five forces slowly crushing profitability in insurance. Understand these forces and you’ll know exactly what to fix—and what to ignore.
The 5 Pressure Points
1. Operational Costs
Insurance companies spend over 65% of their budgets on distribution and support. Layer in IT overhead and the number climbs fast. Manual processes, duplicate systems, and legacy tech all create drag. You’re paying people to do work that should be automated.
2. The Combined Ratio
A combined ratio over 100 means you’re losing money. In 2022, the average was 102.4%. That’s not a rounding error. That’s a system-level problem. Fixing it means lowering expenses or boosting retention. Most carriers struggle to do either.
3. Flat Growth
Insurance grows about 2% a year—below GDP. There’s no room for waste. There’s no room for errors. New customers are expensive. Losing existing ones is deadly. Flat growth is the result of slow processes, generic experiences, and zero innovation.
4. Churn
5% monthly churn sounds small. It’s not. It compounds. It eats your book. Most churn comes from friction—slow claims, poor communication, impersonal service. Customers leave because they feel ignored or inconvenienced. Fix the friction, and you fix churn.
5. Customer Expectations
This might be the hardest one. 72% of users want digital-first service. They don’t want to call. They don’t want forms. They want fast, clean, easy interactions—on their terms. Insurers are not being compared to each other. They’re being compared to Amazon.
What This Means for Insurance Execs
These five forces don’t act alone. They stack. They squeeze. Together, they form the Pressure Capsule—a closed loop of shrinking revenue, rising costs, and eroding trust. And if you don’t break the loop, the loop breaks you. So what can you do?
Tactics That Actually Work
Automate what slows you down.
Start with claims and policy servicing. Use AI to reduce tickets, accelerate decisions, and route cases. Less time on basics means more time for value.
Cut the waste.
Audit your tech stack. Identify duplicate tools. Consolidate systems. Eliminate redundant processes. Most insurers use five platforms to do what one modern system can.
Personalize at scale.
Stop blasting emails. Start building smart customer journeys. Use behavioral data to trigger real-time offers, messages, and recommendations. Personalization isn’t just nice. It improves conversion and loyalty.
Build retention into your product.
Make renewals frictionless. Offer flexible coverages. Create proactive support with AI agents. Churn drops when people feel supported—before they complain.
The Model in Action
Use the Pressure Capsule like a dashboard. Don’t guess what’s going wrong. Measure where the pressure is highest:
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High churn? Look at claims and service speed.
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Poor margins? Investigate tech costs and process delays.
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Slow growth? Check time-to-quote, onboarding friction, or lead conversion gaps.
Once you know where the pressure is, you can act with precision. Stop throwing tools at symptoms. Solve the root cause.
What You Risk by Doing Nothing
If your competitors fix their Capsule before you fix yours, you lose market share. You lose talent. You lose trust. If you think “We’ve always done it this way” is a strategy, you’re already behind. Today, inertia is the most expensive decision you can make.
FAQs
Q: What is the Pressure Capsule model?
A: It’s a framework that highlights the five forces undermining insurance profitability: operational costs, combined ratio, flat growth, churn, and customer expectations.
Q: How can I apply this model to my business?
A: Assess where you feel the most pressure. Start by gathering real data on costs, retention, and CX. Prioritize action in the area with the biggest impact.
Q: Do I need new tech to solve this?
A: Not always. But if your systems can’t support automation, personalization, or integration—you’re probably overdue for an upgrade.
Q: What makes this model different?
A: It focuses on what really matters. No fluff. Just the five biggest drivers of loss—and how to fix them before they break your business.
