Blogs & ArticlesAutomated underwriting | What the future hold for underwriters

December 17, 2021

Having realized the need for efficiency and evolving customer expectations, most insurers have been moving steadily towards greater digitization. Automated underwriting solutions with their potential to drive health of a business, have become a key focus area for businesses transforming their IT infrastructure.

Underwriting has always relied on human expertise, but a combination of rising claims and high competition is pushing companies to take a new look at how underwriting can be made faster, smarter, and more efficient. The result is that most insurers have actively been upgrading their underwriting capabilities with more advanced technology and expanded data sources.

The insurance industry is all set to see more companies use automation tools to manage underwriting decisions effectively. They are set to use tools that will give insights to the underwriters on how they should price their business dynamically.

 

Forces driving the change in underwriting

  1. A shift in trajectory

Underwriters are being challenged to move from hindsight – where underwriting decisions are evaluated after the fact – to foresight, where the past data is actively monitored to identify patterns and predict the impact of risks added to their books of business in real time.

In future, the availability of alternative and predictive data will increase, making risk selection increasingly competitive and facilitation of real-time adjustments to underwriting strategies more pivotal. In this scenario, underwriters will likely need to upgrade their tools and skill sets to thrive in this dynamic, forward-thinking world.

  1. Nature of risk

The way users consume insurance today is very different to how it was practiced just five years back. With new insurance products like bite size insurance or on-demand insurance introduced in the market, the nature of risk itself is changing.

Underwriters today and in the future will need to adapt to the evolution of risk to remain relevant and stay competitive.

  1. End-to-end digital customer experience

Insurers can easily create a differentiation factor through customer experience. And underwriting plays a key role in this differentiation. Technologies like analytics, AI, and alternate risk engines, linked through well-developed APIs, can offer insurers seamless digital experiences that can help take quick underwriting decisions.

These very technologies also help the insurers deliver the right products which are competitively and appropriately priced and the offerings are personalized.

Technology automation can help stitch these forces into the underwriting journey. It can lead to effective risk selection, appropriate pricing and improved customer experience — all of this at a much lower cost.

 

Automation in underwriting

Underwriting excellence requires a relentless focus on five essential building blocks:

  • portfolio steering
  • pricing adequacy
  • risk selection
  • capacity optimization
  • coverage design.

However, underwriters working on legacy platforms are increasingly weighed down with several unproductive tasks, such as manually compiling information from disparate sources and interfacing with multiple systems. The result is often insufficiency of data, lost productivity and higher costs.

Solutions utilizing intelligent automation can process repetitive tasks more efficiently, while freeing up underwriters’ time and supporting them to perform more value-added tasks while providing necessary data in real time.

Automations can be deployed across the underwriting value chain – from data gathering to risk profiling to finalizing the price of the policy. These days insurance customers expect to get the best-possible rate offered to them within minutes of providing their details, no matter if they are in the market for life, home, motor, or some other form of insurance. By enabling decisions algorithmically, automated underwriting helps the industry keep pace with the consumer’s expectations.

Automation in underwriting is being practiced in the following ways:

  • Automation is used to screen an applicant’s information and flag risk factors that an underwriter must review carefully.
  • Automated underwriting uses a framework-based approach for underwriting decisions and escalates any deviations in the process.
  • Intelligent risk computing can also provide underwriters with the feedback for continuous improvement over time and empowers them with more details.
  • Developments in digital data capturing will bring seamless-ness in automated solutions. It will help in scaling expertise and in making accurate decisions more consistently while making the process faster and more efficient.
  • Digital underwriting process is expected to reduce the time-consuming process of sifting through paper-based data and reduce the chances of manual failure.

Automated underwriting solutions create a layer over the legacy systems, where all the critical underwriting decisions and policy management happens. These platforms are integrated with the legacy core system eliminating duplicity of information. Agent portals, enhanced communication and real-time visibility into the underwriting process helps agents and underwriters to work collaboratively.

 

Conclusion

Underwriters can only be successful if they operate efficiently by keeping the costs low, stand out from the competition, and maintain the claim costs with well-strategized pricing and underwriting.

Our clients are able to influence the outcomes in different ways. While some are automating the process for effective workflow, others have taken up faster processing on priority. Most of the insurers have started underwriting transformation efforts through automation, but in order to achieve success, it is necessary to identify the measurable business outcomes that the automation transformation will support. Should it be used to reduce cost by X? Better the loss ratio by Y?  Increase the policy retention by Z?

We can help you identify the outcome and help underwriters make their tasks efficient and business outcome focused. Talk to us at info@inubesolutions.com.

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