Insurers under pressure from tight timescales and resource constraints, yet only 18% of those surveyed using automation to ease the burden

A new thought leadership report released today by LCP reveals how insurers are navigating today’s capital modelling and validation challenges and why embracing automation is key to unlocking efficiency and enabling deeper analysis.

LCP’s latest Capital Modelling and Validation Market Insights Report, surveyed insurers across the market about the key issues and challenges they are facing. 63% of firms said reporting is the most resource-intensive aspect of validation, while over half (59%) cited tight timescales and resource constraints as their top challenge. Despite this, only 18% of firms report adopting automation or advanced tools to ease the burden.

LCP is urging insurers to embrace the efficiencies that automation can bring, significantly reducing manual effort and freeing up time for deeper analysis.

Other key findings in the report are:

• Shifting focus areas: Underwriting risk, market risk and dependencies were the most common areas of planned focus over the next 12 months, with firms also prioritising improvements in efficiency, reporting, and emerging risks like climate, cyber, and geopolitical uncertainty.
• Blended resourcing models: around two-thirds of firms use a blend of resource to deliver validation, but approaches can vary significantly by firm. Larger firms rely more on Line 1 teams, while medium-sized firms lean more on external providers.
• Model change outlook: 35% of firms have no major model changes planned in the next two years. However, 27% expect significant updates driven by changes in risk profile – highlighting the need for clear planning, challenge, and governance.
• Board and regulatory engagement: Most boards are moderately involved in model oversight, with larger firms showing more direct board challenge. Meanwhile, 69% of respondents agree that regulatory expectations are clear and reasonable.

Cat Drummond, LCP Partner and author of the report, commented:

“Validation is no longer just a compliance exercise – it’s a key pillar of how firms understand, govern, and improve their capital models. This year’s review shows that, while firms are working hard to meet expectations, there are real opportunities to improve efficiency, embrace automation, and ensure emerging risks are appropriately captured.”