Automated underwriting

The rise of the bionic underwriter

The media is awash with articles discussing digital transformation and the importance of data in decision making. The industry is being convinced of the benefits of turning insurance from an analogue into a digital market – ‘it’ll be quicker and will reduce costs’. But can we be confident that the market is truly ready for such an approach and is it what’s best for the market? Andrew Yeoman, CEO of insurtech, Concirrus, considers what automation might mean for the market and the people working in it

With a growing appetite for operating efficiency, the insurance market has reached a point where a natural next step is that of automation. The availability of vast new sources of data, more advanced data analytics and digital tools opens a world of potential benefits for both insurers and their customers.

However, automated underwriting is a change that strikes at the very heart of a traditional insurance business. Rather than it being a utopian technology that will solve every business problem, it is a tool that can, where applicable, help make better decisions faster.

No-one would want to have a job that could be done better by a computer yet there are many such tasks in each and every insurer that could be automated. Take submissions for example. With hundreds of submissions a day, automation technology can review those submissions without human involvement and triage them against a set of criteria.

Technology can analyse the proposed premium versus the technical price of the risk and assess on past performance whether this is a broker that they are likely to bind with. This is technology that leaves you in control but takes away mundane tasks with ease.

If a risk meets your criteria, that you control, the binding process can also be automated. More business can be written with the same amount of resource and this ultimately improves operating efficiency and protects jobs.

Automation has a huge part to play in better managing the manual processes that currently characterise underwriting and claims. Hundreds of hours are being spent on reading documents, attachments and emails to then key and rekey that data. With the use of automation technology, those hours can turn into minutes. This frees up time that can be given to tasks which uniquely require the underwriter’s experience and skillset to the benefit of the company.

IS THE MARKET READY?

Candidly, this is an existential need. The ‘digital future’ for the market is not optional, it is where we will end up. At an individual level, it is natural to be concerned as we enter this ‘brave new world’. But simply put, if we don’t do it, it will be done to us. Technology fuelled competition is entering the market with advantageous expense ratios. Automation can drive efficiency and this efficiency is necessary to ensure that the market thrives.

Rather than automation being perceived as threatening the fundamentals of the industry, the reality is that it is a tool that should be embraced to improve the efficiency of the market.

Arguably, the role of the underwriter is changing, in the best possible way.

Insurers can reap a number of benefits by using the tools

“Automation has a huge part to play in better managing the manual processes that currently characterise underwriting and claims. Hundreds of hours are being spent on reading documents, attachments, and emails to then key and rekey that data.’’

Andrew Yeoman Concirrus

and benefits that automation can deliver. The first is giving underwriters time back to leverage that wealth of experience where it can make the most impact. The time freed from the tasks that can be assumed by automation can be spent where it truly leverages the talents of the team in negotiating the nuances of complex risks.

LONG ROAD AHEAD

Each insurer CEO we talk to has a clear mandate to reduce expense ratios, increase return on capital, and leverage technology for an operating advantage.

However, the burden of proof for the ROI of an automation solution and the ease of implementation lies with the vendors, not the insurers. We, the vendors, live every day in a technology ‘bubble’ and it’s our responsibility to understand our customers’ business and translate technology capability to business advantage.

Underwriting is set to undergo a fundamental change with data-fuelled, algorithmic-powered solutions maturing from only being capable of handling simple risks to coping with more complex risks.

BIONIC UNDERWRITERS

The underwriters of tomorrow will be bionic (a phrase coined by BCG) and digital technologies will seamlessly interact with traditional processes. We’re used to this in our personal lives using Siri, Alexa, Amazon, Monzo and the like, solutions that we interact with and make us more productive. Now is the time for these solutions to come into the workplace.

However, it is only natural that some people feel uncertain about their ability to adapt and develop new skillsets as the pace of technological change rapidly increases.

For this reason, it is up to the tech vendors to talk in a language that the (re)insurance industry will not only understand but can also buy into. The message they need to deliver is that technology is not a threat. Instead, it must be made clear that technology is there to create efficiencies, making their lives easier through the automation of laborious, and time-consuming manual processes.

ENSURING PREPAREDNESS

The industry should be asked to consider if they were to build their organisation from scratch today, what parts of the current operational process would you replicate? Which parts cause you to be less effective? These would be the prime candidates for automation.

Another way to find realistic ways to implement technology is by conducting a future visioning workshop. Insurers can use this type of workshop to inform the scope of capabilities and what ‘could’ be done in a perfect world and see how those capabilities can be used in real-world situations.

Ultimately, the adoption of new technologies is changing the industry at a rapid pace. In the future, innovation will be viewed as the norm as the seismic shift to advanced ways of working continues.

The bottom line is that in the future, AI will power the majority of insurance processes and in turn, free up time for skilled staff across organisations to focus less on the process and more on informed decision making. The key will be to understand its true capability to transform the business and make sure we all follow the same narrative.