The Role of People and Technology in the Future of Underwriting

Insurance Insights | Robert Anderson |
20 April 2023

Insurance underwriting is at the beginning of a transformation, which will greatly change how it will be done. New technologies and techniques will help reduce risks for insurers and reduce premiums for customers. This will lead to improved client relationships and help attract new business.

Endava's report, Top Trends That Will Underpin Digital Acceleration in Insurance, explored how insurers can use digital tools to catch up to other financial sectors and provide clients with more personalized services. This blog will explore how these tools may affect the future of underwriting and help modernize traditional methods.

The Current State of Underwriting

Underwriting is filled with inefficient and manual processes, particularly in the specialty market. Submissions are often done via email, and gathering required data can be a long, drawn-out process. It takes a lot of effort by an underwriter to be able to properly review a submission, determine if it’s within risk appetite, calculate the premium for it, and finally generate the binder and policy. Anything that can reduce this effort even slightly would result in huge gains.

Technology for the Future of Underwriting

Underwriting is not an exact science. If it was, we could simply develop an algorithm with all the relevant information and develop an ideal insurance coverage solution. In specialty insurance, this is not currently possible. However, there are ways technology can make it more efficient.

There are four primary ways that technology can support the underwriting process: submissions, auto acceptance, data gathering, and workflow. A modern underwriting workbench aims to target some or all of these areas.

The first area technology can help underwriters is in the submission process. As stated previously, these are often done via email. By having a central repository for these submissions, you can liberate them from individual email inboxes. This enables analysis such as how many submissions insurers receive, the percentage of them that are accepted, and how profitable certain lines of business are.

Submissions can be centralized in two ways, either through a user portal where the applicant submits all the information directly into a webpage, or through API connections that exchange data between the back-office systems.

Underwriters often receive submissions that they cannot or are unwilling to underwrite. By using technology to filter the submissions to those that meet certain criteria, the underwriter can focus on those that are likely to be underwritten. This filtering can be done in a number of ways, but the two most prevalent are through parameterization and machine learning.

Another area where technology can help is in data gathering. For any submission, you need to get some key background information, such as credit rating, financial statements, and any legal proceedings. Imagine being able to press a button and have all this information brought to you. While technology isn’t quite there yet in being able to fully automate this, it can certainly significantly reduce the burden of doing so.

A fourth area where technology can help support the underwriter is with workflow. Technology can automatically handle alerts, approvals, and exceptions regarding submissions. What previously would take a lot of back-and-forth emailing could now all be automated. This will provide important metrics such as how long submissions spend in each phase and which types of submissions are taking the most effort. It can also provide a clear audit trail should the need arise.

The Human Component of Underwriting

In our trends report, we suggested that one of the most important jobs an insurance company has is making sure customers clearly understand what they're purchasing and how decisions about costs and claims are made. This requires fully understanding the customer journey—something technology can't do on its own.

The goal of technology in insurance is to help make a human's job easier and to take over repetitive tasks, not to replace underwriters completely. As such, technology can merely assist underwriters in meeting the increasing demands put upon them. While all signs point to the need for automated systems to augment the underwriting process, the best insurance companies know there's no substitution for people skills.

To learn more about the trends powering digital acceleration in insurance, download the full Endava report.

Robert Anderson

Principal Architect

Robert is an enterprise architect with 20+ years of IT experience and Endava’s principal architect for the insurance industry. His focus is on emerging IT trends, specifically those supporting customer experience, and ensuring that business objectives are met through strategic architecture. Robert has a proven track record of driving change through the adoption of best practices and industry standards. In his spare time, he is a photographer and has had his photos published in magazines, newspapers and photography sites around the world.

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