Automate simple underwriting tasks without sacrificing the Art of Underwriting

With painful underwriting processes underway at many major global carriers, The Insurance Insider, in association with AdvantageGo, ran a web-based survey of over 380 reinsurance and insurance executives in the United Kingdom and North America.

The Insurance Insider’s Market Sentiment survey gathered opinions about the state of global underwriting to explore industry attitudes around underwriting discipline and excellence as well as the role of technology in the market.

Seventy percent of insurance and reinsurance executives said they were comfortable with the prospect of large volumes of simple underwriting tasks becoming automated in the future, according to survey results.

The prevailing view from respondents was that automation largely depends on the complexity of the risk and line of business and that it was easier to deploy automation in more commoditised areas. One respondent declared that, “I work in complex risks but would welcome elements of the task becoming automated such as consistent schedules of values across the industry.”

Insurance Insider Editorial Director Mark Geoghegan said: “This comprehensive survey shows that market practitioners still value experience over a willingness to embrace change. However as long as the new technologies take away repetitive work and enable better underwriting decision-making, there is a growing realisation that they will have an increasing role to play in the insurance workplace of the future.”

Key findings

• The majority of respondents are still uncertain how much of an underwriter’s workload could be automated by smart technology.
  • While 29% of respondents said that some if not all parts of the workload could be automated, 50% of executives were undecided while around a fifth said that none or very little could be automated.
• Contrary to the increasingly common belief, the survey revealed that the impact that new technology-focused underwriting tools have made to underwriting quality in the last five years has been indifferent to low.
  • 36% of respondents declared the impact has been neutral, 24% replied the impact has been low, 9% said very low, with 30% responding that the impact has been high.
• Although the future looks positive for technology-focused underwriting tools in the next five years.
  • Just over half (53%) of respondents agreed that new solutions will have a high impact on underwriting quality in the next five years.
• Data is abundant, but many believe vast swathes of it is still unstructured and a challenge to organise.
  • Around two-thirds (67%) of respondents said the market had enough relevant data at its disposal to produce actional insights to help underwriters.

Many respondents agreed that administrative functions such as account research should be automated, allowing the underwriter to focus on evaluating and pricing the risk.

One executive stated, “you need the underwriting itself to be dictated at the front end for a limited part of the market, but the rest should and could be automated, underwriters just need better access to the necessary data.”

Underwriting flair

However, many of those surveyed expressed the view that certain elements of the underwriting process will always require human interaction, with one executive declaring, “negotiation, relationship management, and adaptive decisions will be left to underwriters since the world of insurance is constantly changing, but many inputting and processing tasks can be automated.”

Executives observed that the impact of technology has not been fully realised as many companies have little idea on how to actually use and leverage technology within their organisations.

It’s striking to see that the majority of survey respondents believe that current underwriting tools have either had a neutral or low impact on underwriting quality.

The survey statistic suggests that many of the available solutions available don’t accommodate an underwriter’s intellectual property and existing data assets. That’s why we recently announced ‘Underwriting’, our workbench solution specifically designed for and in partnership with underwriters. ‘Underwriting’ not only streamlines and automates low-value tasks, systemises processes and improves operational excellence, but leverages an underwriter’s experience and capabilities to augment risk assessment and mitigate risk. We understand that technology should enhance an underwriter’s judgement, not replace it.

Data is ‘like wrestling an octopus’

Regarding data capture, the view from the majority of respondents was that much of the data collection is spotty, unstructured and not readily available in an easy to access format for underwriters to evaluate, one executive commented, “it’s there, just not easily accessed and like wresting an octopus.”

While some respondents said that that any new technology offerings should not be a crutch that underwriters use to make informed decisions, others echoed the industry’s current efforts to embrace change and technology to not fall behind. One executive stated, “the danger with experience is the creation of long-held and sometimes not factual bias; need to combine experience with creativity, technical proficiency and willingness to listen to facts and willingness to change thinking.”

To view the full report, please click here – “The Insurance Insider Market Sentiment Survey 2019“.