Imagine underwriting as taking a selfie and instantly uploading it on social media. Weird. What we mean is, that GenAI is increasingly transforming the regular operational landscape with utmost ease and speed, which is equivalent to clicking a snap in a second and uploading it on social media. GenAI has the potential to transform underwriting operations by offering valuable insights into some of the key areas. With GenAI, underwriters can help insurers identify more value in the submission process and make for better quality and more profitable underwriting decisions.
Unlocking the Road to Leveraging GenAI in Insurance Underwriting?
Insurers are increasingly focusing on optimizing their underwriting processes with multiple intelligent tools for document processing and text ingestion. With these tools, insurers can focus on improving their data sources and analytics, digital core systems as well as the increasing number of frauds. For instance, in 2023, 60% of Indian insurers have experienced a rapid rise in fraud instances, particularly within the Life and Health insurance categories. To take a modernized approach, GenAI is definitely the key.
Here’s how GenAI can be utilized in insurance underwriting:
Risk Control Insights
One of the key areas in underwriting where GenAI can significantly help is offering in-depth risk control insights. GenAI-powered solution can significantly help the underwriters to analyze and highlight the important data for risk control and loss prevention. Here’s how GenAI technology can significantly help the insurers:
Validating Data using Additional Data Sources
How will this help the Underwriters?
By doing this, AI will be able to present a clear and comprehensive submission package which will make it easier for underwriters to make more informed decisions quickly. This significantly reduces the repetitive manual communication between underwriters and agents, thereby speeding the entire underwriting process and identifying any gaps and deficiencies in risk control. The ultimate impact is on the underwriter’s decision-making process which enables them to write more policies without charging excessive premiums and allows them to make decisions faster.
Risk Exposure Accuracy
GenAI will significantly help in offering risk exposure accuracy. It helps the underwriters get a vast amount of data to help them conduct risks accurately and enhance underwriting decision-making.
Imagine a restaurant chain in a high-risk area where the area is prone to landslides and earthquakes. In such cases, to develop accurate policy coverage, underwriters need detailed insights for assessing risks accurately. In this case, this particular restaurant chain had some in the past like safety inspection failures and lack of hurricane protection, which further increased its risk. This is where GenAI can change the game for underwriters.
GenAI can help the underwriters by offering a detailed building and location insight which will include information from safety inspections and geo-location data, such as proximity to a fire station and more. With these insights, the underwriter will be able to quickly understand the full risk context and make better decisions like recommending risk mitigation actions more effectively. This helps in accurately predicting risk exposure and improving underwriting decisions.
Operations Insights
This is another key area where GenAI will be helping underwriters to enhance their risk accuracy. With operations insights, underwriters will be getting recommendations for additional risk controls by analyzing detailed information about the insured’s operations.
For instance, a restaurant chain in a shopping complex with high occupancy and catering services might be considered as a high risk due to potential accidents and property damage. Although the restaurant has some safety measures in place, more specific controls might be needed for catering to operations and fire safety. This detailed information helps the underwriters accurately assess the real risk and assign the correct risk level to the customer.
GenAI Beyond Just Profitable Underwriting Decisions
These key data insights not only help in offering profitable underwriting decisions but also supply additional value as they teach new underwriters to understand the data, guidelines as well as risk insights. GenAI helps underwriters improve their accuracy by using complete data in risk models and reduces repetitive communication between actuaries, pricing, and underwriting teams. This leads to more efficient and accurate risk assessments.
Conclusion
Insurance underwriting is complex and with GenAI powered solution this will be changing. As the insurers navigate through the complex processes, GenAI will be helping in enhancing underwriting decisions by offering accurate data insights that will enable the underwriters to enhance their risk analysis and offer better coverage on policies.
