AI and underwriting transformation: in discussion with Intelligent Insurer

We recently joined an online panel to discuss underwriting transformation with three key players in the industry. Here we recap the key themes from that discussion.

Accurate and efficient underwriting is the cornerstone of profitable growth for insurers. As pressure mounts on underwriters to deliver better and faster decisions, it is critical that transformation initiatives help underwriting teams drive productivity and boost human capacity.

Alongside Paolo Cuomo (Brit), Andrew Rear (Munich Re Digital Partners) and Will Thorne (SCOR), we joined Intelligent Insurer in a webinar to discuss how AI is driving more efficient and accurate underwriting today. 

Insurers are beginning to see impact from AI

It was clear from the outset that the potential of AI has been a topic of discussion for many years in insurance. But today, insurers are beginning to see a real impact. According to Paolo Cuomo, director of operations at Brit, the impact of AI is only going to increase.  

As a result of Artificial Intelligence and Machine Learning, there is a decent chance of being able to do something in an efficient manner today.

Insurers today are most interested in the application of AI where the technology will have the most impact and strong ROI – for example, intelligently prioritising risks to drive underwriter productivity. 

AI excels with complex unstructured data

According to Andrew Rear, CEO, Digital Partners, a Munich Re company, in the mid-market, it’s important to start by asking the right question. How can I make my underwriting team more effective, for example? And then it’s all about data. The best returns on AI will come where there is lots of complex unstructured data, such as in energy or large corporate risks.

Discussions turned to the impact of COVID-19 on insurance, particularly on transformation initiatives and tech priorities. In the mid-market, which often relies on interpersonal broker/underwriter relationships and face-to-face meetings, there has been an increase in digital channels to enable the trading of risk – according to Richard Hartley, CEO, Cytora.

Two years of digital transformation in two months

At Brit and areas of the London market, Paolo Cuomo noted that two years of digital evolution have taken place in the past two months. Not only that, people who thought they couldn’t work remotely have been able to do just that. As an industry, we’ve fundamentally been able to adapt to this “new normal”. 

However, being remote means it’s not as easy to turn to the person beside you for support. Individual underwriters are having to think more broadly, using more data to help them understand a risk.  

This is the idea of the bionic underwriter, where you’re not replacing that function – you’re enhancing the underwriter with AI and machine learning. We’ve seen underwriters becoming increasingly aware that it’s a future that’s here now. It’s becoming the new normal.

Machines support underwriters for intelligent prioritisation of submissions 

This was echoed by Cytora’s Richard Hartley, who painted a picture of a world where the machine rides sidecar with the human, giving on-the-job recommendations about which risks to prioritise or when to follow up with each broker. 

In the mid-market, this means the intelligent prioritisation of submissions, to focus an underwriter’s time on the highest LTV submission, or filtering those that are out-of-appetite. In this instance you’re not replacing the human, you’re helping them focus their time and making sure they don’t spend time on unnecessary work. 

It all comes down to the “art and science of risk”, according to Will Thorne, head of EMEA specialty and Lloyd’s Ventures, SCOR. Will also echoed the importance of the “bionic underwriter” today, noting that technology driving this relationship is set to proliferate. 

Reducing expense ratio through underwriter productivity is key

Looking forward, from lower mid-market to large comercial, expense ratio is going to be a major focus as insurers move beyond Covid-19. Close to fifty percent of premium is lost from the cost of delivering the product alone today. According to Richard Hartley, this will drive adoption of AI, which will be implemented to drive near term value through underwriter productivity.

Data is hugely important in every aspect of the insurance world, according to Brit’s Paolo Cuomo. In underwriting, data and AI will also be used to nudge underwriters, delivering them insights and on-the-job recommendations. If you can nudge an underwriter to think differently, it will drive stronger – and more profitable – relationships. 

The session ended on the thought that insurance companies are taking major steps to redefine how they differentiate during this difficult period. AI and data are forming a key part of those strategies, driven by the maturity of the technology today. 

To listen to the webinar in full, please click here