Could 2019 be the year of an underwriting technology transformation? We’re not yet ready to make that prediction, but we do see the makings of a transformation, as more insurers invest in technologies that they believe will deliver solid returns to their top and bottom lines. In fact, underwriting is the second-largest category within the growing life insurtech investment sector. It’s second only to investments in distribution and marketing, according to Accenture Research. Therefore, it’s no surprise that insurance technology underpins each of our underwriting predictions for 2019 and beyond:
- Most of the life underwriting process will be digitalized. One of the last holdouts in delivering a digitally underwritten life insurance policy — the attending physician statement (APS) — will finally be resolved thanks to ACORD-standardized transactions. While it won’t reduce the time it takes for a physician to review and send the APS, it will speed the process of absorbing the information into your underwriting system, helping you more quickly evaluate risks and premiums within a rapid, automated digital underwriting process. As application programming interfaces (APIs) continue to become more readily available, the need for interoperability standards, such as ACORD, will grow and help drive adoption of blockchain to further speed underwriting and ensure underwriting integrity.
- Underwriting profitability will come under even greater scrutiny. We believe 2019 will be a pivotal year for data analytics and insights. The drive to meet or exceed aggressive price targets and service levels requires a mastery of data science whether in-house or as a service. This includes predictive modeling on the fly, as new insurance products and product variants — especially simplified-issue products — are introduced at ever-shorter intervals. Insurers will also look to operational data for insights that can help them improve new business profitability, particularly opportunities to accelerate and streamline evidence collection.
- Underwriters will gain superpowers from AI. In 2017, we predicted that underwriters would not be replaced by AI and chatbots, and we maintain that position. In fact, we believe AI and robotic process automation (RPA) — machines talking to machines — will give underwriters “superpowers” to automatically process higher application volumes, and collect and parse through evidence faster and more reliably than ever. According to Accenture Research, many underwriters spend less than half of their time processing core information and instead are burdened with mundane tasks such as data entry. AI can free them from these tasks to focus on high-value activities that drive faster, more accurate decisions. For example, Australian insurer TAL created “Wunderwriter” that uses AI to ensure quality assurance in the underwriting process. The company garnered a silver award in the Artificial Intelligence category at the 2018 Efma-Accenture Innovation in Insurance Awards.FACT: More than 90 percent of insurers are using, planning to use, or considering the use of, machine learning or AI in claims or underwriting processes.[i]
Ok … I know the title says “3” underwriting predictions, but perhaps this next one should be 3.5. It’s emerging, but on most insurers’ horizons, if not their budgets. As underwriters obtain more information from external sources, we see blockchain playing a key role, not only in data security, but also data veracity.
- Blockchain will enable a one-stop shop for all medical data. While this prediction is one to watch into the not-so-distant future, underwriters today are relying even more on publicly available data. Blockchain enables a single source of truth for digital health records by centralizing private information and logging transactions in a secure environment. As the regulatory environment around blockchain transactions evolves, and as the underwriting process undergoes further streamlining and automation, blockchain is likely to become a viable technology to increase transparency and trust.
If even one or two of the predictions holds true for 2019, one thing is certain: the accelerated pace of underwriting innovation will not abate in 2019. The question remains, will you be a part of it?
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