Underwriting in the digital era — a transformational journey

The digital era is enabling new opportunities as well as challenges for underwriters. Today, there’s a requirement for massive quantities of information from different sources to evaluate risks, leaving underwriters with a significant amount of data to sift through so they can effectively rate the risks for a new customer and determine the coverages that should be offered.

This information comes from third-party reports, credit scores, reports on property values and inspection reports, along with other data about the customer. Just getting that information assimilated can take weeks. Then the underwriters must carry out location assessments, drawing on such sources as Google Maps to assess the risk area, surrounding areas and the condition of the specific property to determine whether the risk should be accepted. Working through so much data takes time and delays processing a new business policy, creating frustration for the insured party and increasing operational costs.

Digital technologies — such as artificial intelligence (AI), cognitive computing, robotic process automation and predictive analytics — turn the process on its head, allowing the underwriter to gather information and make an informed decision in hours rather than weeks.

Embracing technology

A growing number of insurance carriers are seeing the benefits of adopting digital technologies. This is being driven in part by customers demanding self-service where they can take greater control of the process, for example by taking their own photographs and submitting them electronically for evaluation rather than scheduling an appointment with a property inspector.

Several digital technologies are now being used by more progressive insurance carriers. At their simplest, next-generation platforms enable self-service property inspections by providing the means for digital photos to be sent in by the potential customer and immediately evaluated, based on a set of criteria. This helps to hasten the risk-evaluation process. The ability to send and receive reports in real time while using analytics to evaluate that information makes it possible for underwriters to quickly determine whether a risk should be accepted.

Taking digital technology capabilities even further, cognitive computing makes it easy to quickly assess all those different sources of information and provide an analysis that allows the underwriter to decide whether there is enough information to make a decision and whether to accept or reject the risk.

These cognitive computing tools, such as IBM Watson, are first trained to understand underwriting guidelines and then to carry out visual recognition and information evaluation steps on the data available, which often comes in the form of photographs. A risk score is then created and weighed against company-specified guidelines. In addition, chatbot technologies can be used to provide guidance to underwriters to further assist them with their risk evaluation.

Shifting gears in a new era

The move to using digital technologies is not without some complexities as well as perhaps some level of human discomfort. Companies have to change their processes to work with digital technologies, and they must also address the mind-set within the business for full adoption.

The fact is that some jobs are likely to be replaced by digital technology, so it will be necessary to prepare and scale up the workforce to handle more complex processes and decisions and leave the data gathering to technology.

Another consideration is that many of these digital technologies are cutting-edge, so there will still be a need for oversight to ensure that the results and findings are usable and relevant. More broadly, organizations need to assess how these technologies will affect underwriting and other processes.

Ultimately, digital technologies will benefit both the business and the workforce. For business, digital delivers greater consistency and improves quality. For example, when tools such as IBM Watson are trained to carry out underwriting processes, they use complex algorithms to arrive at decisions, and those decisions will be consistent. When people do these processes, on the other hand, decisions will often vary based on different opinions, different levels of experience and even the type of day the underwriter is having.

For employees, the benefit lies in allowing them to focus on more exciting and challenging activities rather than simply gathering data.

Putting digital into practice

Several market leaders are starting to embrace digital technologies such as robotics to assist with underwriting processes. For example, as TechEmergence noted recently, one insurer is experimenting with a new app to help drivers involved in car accidents assess the damage to their cars in real time, using a smartphone camera. The idea is that the AI capability within the app would be trained on multiple images of car crashes, enabling the technology to come up with repair cost estimates relevant to the damage incurred.

Increasingly, larger carriers are recognizing the value of digital technologies, and even smaller carriers realize they will have to make the switch to stay in business. For these smaller carriers, as-a-service platforms and working with an ecosystem of partners may be the best approach, since they don’t have the resources that larger companies do to invest in their own technologies and the talent needed to develop digital platforms.

Customers have made it clear that they want a digital environment where they can carry out self-service inspections, manage their claims online, and get quick, consistent responses from digitally enabled companies. Whatever approach companies choose to take — whether buying or partnering with insurtechs or adopting as-a-service platforms — they will need to take advantage of digital technologies or risk being left behind by those carriers that are in a position to accept risk faster.


Gayle Herbkersman headshot-loresGayle Herbkersman is the Director of Strategy for Property and Casualty Insurance at DXC Technology. She has more than 25 years of insurance software, delivery and business process services experience. Her expertise is in insurance operations, software implementation and system modernization. Her offering manager role focuses on the adoption of digital technologies to enhance customer experience and speed product development.

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