How Insurance Works: A Window into the World of Property and Casualty Insurance in 2019

This industry note introduces the world of insurance and the principles on which the industry works, with a focus on property and casualty (P&C) insurance in 2019. It explains the core elements of insurers’ business models and how they make money. It describes different types of insurance companies, the key industry players, and how distribution channels are organized. Readers are given an insight into the process of underwriting, pricing and claims handling, as well as an overview of the P&C insurance market. The impact of digital transformation and changing customer behavior on the industry are also discussed.

This industry note aims at helping readers unfamiliar with the insurance industry, gain a brief overview of the insurance world, its structure, players and key mechanisms, to allow them to be at ease when discussing case studies placed in insurance industry settings. This industry note is particularly well-suited to be used in conjunction with INSEAD case study “Lemonade: Delighting Insurance Customers with AI and Behavioral Economics”, its related Teaching Note, as well as its supplementary PowerPoint slide deck.