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A report by the World Economic Forum states, “the most imminent effect of disruption will be felt in the Banking sector, but the biggest impact will be felt in the Insurance sector”.  It begins with underwriting, which is quite crucial to the insurance business and to an insurer’s performance and customer experience. Today, the insurance companies are facing the herculean task of offering unparalleled levels of underwriting to their customers.

While some insurers have a great reputation for their underwriting capabilities, others struggle to achieve the same. When it comes to improving their performance, it is necessary to understand that underwriting has a lot to do with the risk element and pricing. The insurers need to not only use the available data, but also their judgment when it comes to assessing the customer’s profiles and internal capabilities.

Factors impacting Underwriting

The underwriting performance is influenced heavily by various factors such as marketing campaigns and business development activities along with the distribution solutions available. One needs to understand there is no “one size fits all” formula here. Insurers need to understand underwriting outcomes vary based on region, industry, client background, and the insurance products.

The key factors that impact underwriting value chain the most include

  1. Data gathered from customers – structured & unstructured
  2. Automation –RPA, IOT, AI, ML Capabilities
  3. Big data and data analytics
  4. Underwriting platform based solutions

These are technologies that will affect the customer assessment and monitoring of risks, thereby hindering the underwriting process. Insurers today deal with a significant amount of structured and unstructured data, which needs to be analyzed so they can offer personalized products and flexible pricing to their clients and innovate constantly.  The image below shows the various building blocks that go towards creating a roadmap for better underwriting:

The emerging technologies disrupting insurers are what can help the insurance company create a differentiating factor. They are:

1. Digital channels: Incorporating automation into the underwriting function in insurance is a top priority for all insurers. This will help them utilize the Artificial Intelligence capabilities to stay on top of the customer demands and emerging trends. This helps insurers make better-informed decisions, thereby increasing the speed across processes, and better customer engagement at the end of the day.

With the help of automation, insurers can pick out high-risk elements, or any discrepancies from the application forms. Using the framework within the system, the underwriting process is completed in no time. With an automated system in place, the entire process of underwriting is standardized, which leads to insurers offering consistency with every client. These will help optimize the cost, and operational efficiency as well. Since data is captured from various sources, including social media channels, the initial stage of assessment is quite thorough, and the predictive analytics tool helps reduce inaccuracies and offer better decisions to the clients.

2. Big data & data analytics: Significant technological advancements over the years, especially the advent of big data and data analytics has changed the rules of the insurance game. This is leading to radical shifts in traditional underwriting and the number of insurance companies that are applying these tools is rising every day. The system will soon be entirely automated and driven with analytics across the process. It will be used to gather, verify & authenticate data and drive improvements in the underwriting service. Subsequently, there will increase in sales, business profits and customer experience.

3. Behaviour based models: The business of insurance today includes connected wearables and other new technologies, which is going to transform the underwriting space. It will make the entire thing faster, and save cost for the company.  Using the wearable device, insurers will capture data about the client’s lifestyle, behaviour patterns, spending abilities and preferences. Customers can enjoy discounts and flexible premiums, which becomes a value add feature. Apart from these, customers receive alerts and notifications whenever there is a shift in their behaviour or risk levels. This will alter the underwriting service levels to a great extent. 

To put it in a nutshell, this is what the role of an underwriter is going to look in the future,

 

While the role of underwriting will continue to evolve with the emerging markets, it is a good time to consider incorporating new technologies and embracing the new sophisticated tools. At Neutrinos, we have been tracking the market changes and creating digital insurance solutions, which have been implemented by some of the leading insurance companies across the globe. These solutions can help companies transform their underwriting, claims and other services consistently.

We can help you offer seamless and integrated multi-channel experience that will increase efficiency and customer satisfaction as well. To know more on this and to offer high levels of customer experience, reach out to us now!

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