This was stated by a London market broker at an Insurance conference few months back in London while responding to a comment about the highly automated future of the business functions in an insurance company powered by big data, AI and ML.
That was not hugely surprising. It is an articulation of a deep rooted belief that an insurance organization is too unique to be labeled in same fashion as other businesses for digital and / or automation readiness or adoption.
Technology is rapidly catching the insurance industry up. It’s just that some in the insurance industry don’t yet realize it. Let’s examine some key developments in insurance space where “something digital can help underwriters write business faster without using a Mont Blanc Pen”.
AI and Machine Learning
Insurance underwriting means selecting the risks that are good risks, and hence, even after hundreds of years of experience there are certain events, activities or exposures that are not insurable as they are considered bad risks. This may no longer be the case with new breakthroughs in Artificial intelligence and machine learning. As per a report by Spiros Margaris, a venture capitalist and thought leader, it’s possible that through emerging technologies such as artificial intelligence, enhanced through machine learning, targeted offerings like jumping out of airplanes for fun may be a possibility.
This offers underwriters opportunity to develop new product offerings enabled by machine learning algorithms that can offer new insights from data and thus helping underwriters price the risks appropriately. According to one EY report on Underwriting, future underwriters will have an additional role i.e. data scientist.
Further, Pay-as-you-go policies will permit companies to insure customers when, for example, they want to become engaged in a sports activity, like parachute jumping, for which they are not yet insured. The insurance gap for people that are not insured but would like to be for a specific moment or period is a huge opportunity.”
Automating business operations using Robotics means more bandwidth for Underwriters to concentrate on acquiring new business as well as increase retention ratio when renewals are due. RPA and Cognitive Automation solutions are leading the adoption of managing transactional and knowledge-based business processes with unstructured data.
As per one report by Everest Group Research, smart digital workforce is the ‘to-be’ state for insurance industry. The smart digital workforce will immensely facilitate the underwriting function by taking care of KYC, customer onboarding, customer servicing, sentiment analysis and fraud detection.
Dedicated Underwriting Systems
A software solution specifically made for underwriting and underwriters is called an Underwriting “desktop” or “work station”. Underwriting-centric software has enabled carriers to reduce leakage, improve risk selection and pricing, lower processing costs, provide integrated account management and enhance the overall quality of their books. Such underwriting systems use complex, rules-based methodologies such as profiling techniques and predictive models to best align risk selection with appetite and pricing with exposures, optimize contractual terms and conditions and tailor risk management programs.
Chatbots, the Automated Insurance Agent
A chatbot is a computer software program that is able to communicate with humans using AI.
Magda Chatbot for Link4 Poland’s first motor insurance policy sold online. Arbie works for RBC insurance in Canada. Spixii the little blue parrot an AI Chatbot platform is able to have a dynamic conversation and offers a highly personalized engagement capable of selecting the product or a combination depending on the needs of the insured.
The rise of the automated insurance agent has been fueled by multiple factors most notable amongst them being Facebook’s major announcement opening up the Messenger platform to Chatbots. It allows insurance firms to deploy distribution, claims and customer service straight into a platform that has 900 million regular users each month.
To conclude, there are multiple technologies that are now enabling the entire insurance underwriting function right from intake to binder and policy issuance including new business models led by apps like Friendsurance, Lemonade, Metromile, Simplesurance et al. Underwriters can definitely write a greater quality of business faster while the Mont Blanc pen is resting in that decorated pen holder.