The survey looked at 12 specific technologies and capabilities:

—   Predictive analytics

—   Big data

—   Machine learning

—   Artificial intelligence (AI)

—   Automated portfolio management

—   Blockchain

—   Underwriting trading platforms

—   Robotics process automation (RPA)

—   Geographic information systems (GIS)

—   Sensor-based

—   Semantic web

—   Image and video analysis

What follows are some of the survey's key findings.

Investments, benefits and impacts

The survey findings revealed clear delineation between two tiers based on the level of adoption. Predictive analytics, big data, underwriting trading platforms, RPA and GIS are the technologies with most activity to date. They also will remain priority for future investments.

See also: Innovation can overcome growth obstacles for insurers

Current adoption

Half of the technologies — machine learning, artificial intelligence, blockchain, RPA, sensor-based, image and video, and semantic web — are in research, proof of concept or pilot phases. 

Investment focus

• |
  • |
    • |
      • Predictive analytics: pricing
      • Big data: location and demographic data
      • Underwriting trading platform: underwriting workstation, policy administration systems and agent portals
      • Automated portfolio management: business intelligence tools and exposure accumulation management

Other notable shifts in investment focus include:

• |
  • |
    • |
      • Machine learning: shift from decision tree learning to associated rule learning
      • AI: primary focus on automated reasoning as investments expand
      • Blockchain: move from consortium to more public and private

Functional impacts

The impact of new technologies is being felt across the underwriting function at every level. To date, underwriting and pricing capabilities have been most impacted by the more mature technologies (predictive analytics, big data, automated portfolio management, underwriting trading platforms and GIS), as well as machine learning and sensor-based technologies. RPA will have an increasing impact in the future.

The multifaceted nature of the underwriter's job will continue to be important. (Photo: iStock)

Key benefits

Predictive analytics, big data, automated portfolio management, underwriting trading platforms and sensor-based technologies have driven tangible benefits in loss ratio, net account growth, existing premium growth, productivity and expense reduction. Future investments in both mature and newer technologies are expected to bring additional benefits in loss ratio, new account growth, customer retention and the customer journey.

Related: 5 artificial intelligence tools defining the future of P&C insurance

Benefit No. 1: Resource planning: the underwriting skill set

The multifaceted nature of the underwriter's job will continue to be important and only grow more diverse in terms of roles and responsibilities. Thus, it is not surprising to see survey respondents share their ideas about how both the art and science of underwriting are evolving in four specific roles:

• |
  • |
    • |
      • Sales executives: growing the book of business, increasing retention rates, building relationships, lead generation and prospecting
      • Data scientists: data-driven decision-making at the account and portfolio levels, risk insight, profitability analysis, predictive modeling for pricing and risk evaluation
      •  Customer advocates: improving the customer and agent experience, coordinating account services (loss control, claims, education) to strengthen customer loyalty and improve risk performance
      • Innovators: creative problem solving, new product and service development

Benefit No. 2: The broker perspective

Brokers value market-facing capabilities (distribution, sales and service), as well as product management, third-party data, and underwriting and pricing capabilities for future technology investments. Insurers and brokers are aligned around underwriting and pricing as the most important capabilities to be enabled by mature and emerging technologies.

The future of underwriting is now

The rapid maturation of digital technologies has transformed and disrupted a broad range of industries. It is well known that the insurance sector has been slow to develop the types of agile capabilities and rich experiences that today's consumers expect. The EY Digital Underwriting Survey underscores both the importance and urgency of digital transformation within this essential insurance function.

As highlighted by the survey results, underwriting stands to benefit greatly from the digital transformation, especially when digital enablement is combined with the modernization of the knowledge, skill set and roles of underwriting professionals. While the underwriting community has been enthusiastic in embracing EY's vision of the underwriter of the future, it is increasingly clear that the future already is here for many insurers.

Gail McGiffin is a principal with Ernst & Young LLP. She can be reached by sending email to [email protected].

Related:

3 best practices for collaborating with InsurTech startups

Why InsurTech is such a P&C industry game-changer