2020, so far, has been a year of incredible global upheaval and uncertainty, but it has also been a year of enormous reimagining and redefinition both at a personal and business level.<\/p>\n\n\n\n
From a business POV, many organisations that believed the only way to get business done was having staff work from an office or through face-to-face negotiation have successfully transitioned to full-time home working. Sadly, this has not been the case for all businesses, with many industries unable to adapt to the new normal.<\/p>\n\n\n\n
The insurance industry has taken, surprisingly well, to home working with minimal disruption. Word on the street is that many insurers are not too keen to return to the office full-time soon. I suspect that once we are over the pandemic, a hybrid working model will emerge with many people dividing their time between the office and home working.<\/p>\n\n\n\n
Before the pandemic, one particular role in the insurance industry<\/a> was already experiencing its own kind of redefinition. The increasing automation and digitisation of the underwriting process has transformed the traditional underwriter’s role calling for a skill set adjustment. Read my colleague\u2019s insightful blog on Digital Dexterity And The Underwriter<\/a>.<\/p>\n\n\n\n However, automating low-low value tasks doesn\u2019t appear to be happening fast enough.<\/p>\n\n\n\n A recent article by McKinsey<\/a> states that \u201cEven in large commercial lines today, anywhere from 30 to 40 percent of an underwriter\u2019s time is spent on administrative tasks, such as rekeying data or manually executing analyses, suggesting at least some opportunity for digitization and automation<\/a>.\u201d There is still ample room to significantly bring that number down so underwriters can focus on high-value tasks that generate income and expand business.<\/p>\n\n\n\n While Underwriter\u2019s undergo their own personal metamorphosis, the pandemic has accelerated digital transformation projects. However, the prevailing opinion expressed during the many virtual industry conferences over the past few months indicates that businesses are still not sufficiently investing to make a genuine and permanent change along the entire insurance value chain needed to thrive over the few years. Underwriting in the insurance industry<\/a> needs to get more analytical.<\/p>\n\n\n\n Predictive analytics in insurance underwriting<\/a> is the new frontier. Risk is not static; it continually morphs. Cyber breaches today are very different from those that took place 5-10 years ago. Phishing scams and the cliched lone wolf hacker in a hoodie, which to some extent is true, have given way to ultra-organised criminal groups and even state-sanctioned hacking with nefarious intentions. These attacks, which are often led by teams of hackers with exceptional technical skills, can often go undetected for days and even weeks, causing potentially catastrophic financial loss and reputational damage. This is just one example of how risk mutates.<\/p>\n\n\n\n In today\u2019s turbulent economic and political climate, not using data sources and the granular insights gleaned from various data channels in the entire underwriting process is inexcusable, and arguably, irresponsible.<\/p>\n\n\n\n We expect insurers to take appropriate action and reasonable steps to ensure that the nature and scope of a risk are fully understood. Integrating the wealth of data available into the underwriting decision-making process can seem like a daunting task, but it doesn\u2019t have to be. Through data-driven insights and by analysing renewals, old and new submissions, and incoming data from different sources, Underwriters can effectively forecast and assess the marginal impact of new quotes on their portfolio, identify gaps, and how to close them. Analytics-driven insights have been shown to help Underwriters spot new and emerging markets and opportunities to cross-sell and engage with clients at an earlier stage.<\/p>\n\n\n\nAnalytics-based underwriting<\/h2>\n\n\n\n