Trailblazing people are key to unlocking trailblazing underwriting
Transform underwriting, and you transform insurance.
This year, I was invited to participate in the creation of Cap Gemini’s prestigious World Property and Casualty Insurance Report. Titled ‘How to become an underwriting trailblazer, it explores the dangers of underestimating transformation failure in underwriting and why driving its successful evolution is something that must be done at all costs.
To date, underwriting’s transformation failure has been stifling rather than damaging. But it leaves much of the transformational potential for the entire insurance sector in a stall zone. Transform underwriting, and you transform insurance.
The future of underwriting has the potential to look very different from today. Over 20 years, insurance has slowly progressed from being one of the last paper-based industries to one that embraces digitization. During this period of dramatic change, the amount of actionable information available to underwriters has increased year-on-year.
Connected ecosystems, partnerships, and the human smart device revolution have the potential to radically transform risk decision-making compared to even a decade ago.
Fast forward five to ten years, and the underwriters of the future will be data-fueled innovators. They will enable insurers to change their fundamental nature from paying out ‘after the fact’ to supercharging value through embedded, risk-mitigating, and highly adaptive new business models. They’ll help people understand risk, avoid it where possible, and flex coverage as lives and the environment around them continue to change.
Trailblazing underwriters
However, to achieve this future, it’s vital to confront the significant talent issue rising in underwriting first. As a group, underwriting is a mature community, many of whom will exit the industry in the next five to ten years through retirement.
To repopulate and reinvigorate the function, we need to attract young blood, and there’s never been a better time to do so.
We’re in an exciting era where insurance needs to move away from policy-centric to customer-centric design, built around data science, data fluency, and the intelligence that sits at the heart of this shift. This transformation is driving a huge transformation in job roles and job types. They’re not static roles either. They’ll require dynamic people who’ll constantly require new skills and approaches to explore and interrogate data.
In the data field, there’s also variety, which will increase the attraction of underwriting to new talent. There’s the extraction and hard analysis, but also on the other side, there’s the people using it. Shaping insights is a human process. Even with Generative AI models, humanizing that data and driving human outcomes is what’s going to transform an insight into an action.
Within this changing organizational environment, diversity becomes a really important element. We need new insights and ideas, and for that we need people who think differently. That’s only going to happen if we can draw from a talent pool comprised of diverse sectors, backgrounds, and thinking.
This opens an incredible opportunity to come in and establish the new underwriting role and help evolve the organization, so it understands why and how data will sit at its heart.
Underwriting transformation failure
But for the data paradigm to sit at the heart of insurance, it’s going to require a business model change. Insurers still exist in data silos, and too many core platforms are policy-focused rather than customer-centric.
This hinders personalizing solutions and the optimization of lifetime premium potential. It creates significant obstacles to getting good data, and with it, the ability to act on underwriting outcomes.
Also, too many coretech systems in insurance continue to be based wholly or partly on legacy technology, which bottlenecks data connectivity, and further exacerbates the legacy trap. Underwriters report that administration takes up 41% to 43% of their working day. A further third of the time is spent on core activities, leaving just 25% to 26% for growth and sales enablement.
An enterprise of underwriting trailblazers
We have to get this right. This next wave of transformation needs to be done with underwriters and not to them.
Here’s three tips on how underwriting transformations can be done better:
1. Transform with underwriters The separate “transformation team” is becoming a thing of the past, and so is the top-down approach. There are undoubtedly roles that act as key leading functions or key drivers for transformational change. But their success is driven by collaborating and co-creating with the team of people who are ultimately supposed to benefit from the transformation.
2. Democratize the vision Underwriters will need new ways of thinking beyond their current business process and function. Managing this unknown or ambiguity should be filled by a clear sense of vision. Underwriters should help develop this vision, so they can see their place in it, the benefits it’ll deliver, and in so doing, drive their willingness to execute on it.
3. Value-driven and technology-enabled In agile methodologies, where projects evolve through highly cross-functional collaboration, and steep learning curves, we typically use business outcomes to tell user stories and drive this process.
These short stories outline the desired outcome of making a change. They don’t go into detail. Requirements are added later, once agreed upon by the team, making the solution an evolutionary process, and one capable of responding to learnings as they arise.
This is vital. It’s very easy for specialist functions like underwriting to describe outcomes as solutions. This is a trap because we typically end up using new technologies to deliver old processes or value outcomes. This stifles the benefits and the learning outcomes, and is at the heart of legacy mindset behaviors.
Move from revolution to evolution
The characteristics of a successful transformation are best expressed as becoming an ever-increasingly adaptive insurance business. Agile enough to continuously mine the world for insights that solve problems, and realize new value potential. So developing your transformation, after establishing the right foundations, can be far more value-driven and evolutionary. After-all, it should be changing in a continuum. Underwriting is no different.
The Cap Gemini report describes just 8% of insurers scaling to the heights of a trailblazer, which means that 92% need to do so. So, like all transformations, it really boils down to the people involved. The underwriters.
One thing is for sure, it’ll take trailblazing people to make trailblazing underwriting happen.
Rory Yates is global strategic lead at EIS. These opinions are the author’s own.