Artificial intelligence: The answer to underwriter fatigue
Technology has created a powerful next generation of underwriters equipped to handle the challenges of the new world.
The insurance industry relies on accurate underwriting to remain profitable, and underwriters have always relied on data to make decisions.
In today’s digital world, there is more data available to the underwriter than ever before. This is both a blessing and a curse as underwriters typically have to rely on outdated and generalized research methods to sort through mountains of information.
A large pool of data offers an incredible vantage point for risk assessment, but the sheer amount of information renders the traditional, manual research approach completely inefficient — or even impossible. A high-touch, manual approach is extremely time consuming and leaves plenty of room for human error, oversight and potential premium leak.
What’s more: Business owners looking to purchase insurance may not be completely forthcoming about their associated risk, which can leave insurance providers in the dark. That leaves the detective work to the underwriter, who must leverage disparate resources to create an accurate depiction of risk to write the business.
Tricky business underwriting
Accuracy and coverage are both longstanding watchwords in commercial insurance underwriting. Proper classification of risk requires consideration of many factors and multiple sources. For instance, an insurance provider might receive an application for coverage from a church that, upon first inspection, looks and operates like any other church. However, this church could also operate as a thrift shop during the rest of the week, which would completely change the risk profile. This detail would be very easy for an agent to overlook.
The advent of digital age has brought higher customer expectations, upgraded products and new distribution channels. And while commercial insurance has generally been slower to change and reliant on legacy systems, the proliferation of insurtech options offers a clear path forward to optimize all aspects of the insurance continuum with analytics and predictive data technology — particularly in underwriting.
All these demands can place a terrible burden on underwriters, as they are expected to deliver risk assessments at a faster pace without sacrificing accuracy. And as the world moves faster, traditional research methods will have underwriters struggling to keep up.
The power of AI
Artificial intelligence (AI) is the next logical step in commercial insurance underwriting. In just the last few years, AI has prompted a new evolution within the insurance industry, providing a faster, more thorough and accurate depiction of risk. AI can help expand, deepen and interpret the range of data sources available to underwriters, making company risk data more searchable and accessible. This is how insurers can tap into the data that is everywhere — and constantly expanding — and make it actionable.
In today’s highly commoditized market, pricing and service are the real differentiators. The digital age has trained consumers to expect immediate responses to their inquiries. As such, leading insurance carriers are leveraging AI for real-time data and advanced analytics to reimagine risk evaluation, enhance efficiency and improve customer experience.
Not only does this automation increase speed to quote, it also reduces human error and enables higher accuracy assessments. AI can leverage all publicly available online resources to create a dynamic business classification and risk assessment. So, in addition to providing multiple industry classification codes, the review can also include a crowd-sourced evaluation of the business location, services, safety features and new risk insights via social media posts, reviews and photos. This process is fast, efficient and allows underwriters to focus on risk analysis instead of time-consuming detective work.
Faster, more accurate data
Assistance from artificial intelligence enables underwriters to service more requests with greater accuracy, and ultimately write more business. Other areas that an AI application can help the underwriting process include…
- Customer acquisition: Insurers can suppress leads that don’t match their risk appetite so underwriters don’t waste time researching business they won’t write, and quicker response processes help improve agent and customer experiences.
- Automated submissions: Underwriters can spend hours on data entry, but AI solutions like prefill policy application data and one-click submission-to-quote help simplify and shorten the quoting process. And AI can further validate and enrich information from insurance application forms.
- Streamlined policy monitoring: Real-time insights helps update, enrich, and maintain portfolio data as well as assess new risk, which keeps the process smooth and supports faster premium and policy auditing.
- Simplified renewals: Underwriters can leverage real-time risk profiles and minimize the back and forth between underwriting teams and agents.
AI empowers the underwriting process with faster, more accurate data and information. AI does not do the underwriting — it automates the gathering and validating of information and streamlines the process. Machine learning algorithms can identify patterns and connect data points to reveal insights that would be invisible to most human eyes. Embracing AI in the insurance continuum boosts submission-to-quote speed, limits loss ratios, creates better pricing models and more. This benefit is felt by the customer in the form of faster and more competitive quotes, and higher accuracy in risk detection.
As commercial insurance continues to evolve in practice and application, AI continues to gain ground among insurers seeking competitive advantages. Over the past few decades, our increasingly digital economy has dramatically expanded the amount of both available data and data sources. Billions of internet users around the world contribute daily to this expanding online library — including photos, blogs, customer reviews and social media posts. Although anyone can access this data, the future of underwriting belongs to those equipped to read the insights.
Planck CEO and Co-Founder Elad Tsur (elad.tsur@planckdata.com) is a serial entrepreneur who is passionate about bridging the gap between technology and business. These opinions are the author’s own.
See also: