Other parts of this series:
- Evolving insurance ecosystem requires overhaul of underwriting function
- Solution-oriented products, market awareness two key traits of digital underwriters
- Technology, analytics will play critical role in underwriting for digital underwriters
- Cost-efficiencies, channel-intimate approach vital for carriers evolving into digital underwriters
- The digital underwriter: How underwriting leaders must evolve; and quickly starting your organization’s evolution
In this blog series, I have been examining how insurers will need to modify their underwriting functions and transform into digital underwriters to thrive in the evolving insurance ecosystem. As I note in the Accenture report, Insurance strategy: Evolving into a digital underwriter, 90 percent of carriers are either currently investing in their underwriting functions or plan to over the next three years.
But what traits will carriers have after making those investments? Two of the seven critical traits that define digital underwriters are technology-enabled underwriting and analytically-enabled services.
To nimbly respond to market demands relating to their products, services, pricing and rules, digital underwriters must be enabled by effective technology. That will require carriers and their IT functions to become better partners in developing the required platform, infrastructure and development/operational processes. Accenture’s Underwriting Survey found that only “approximately half of the underwriters surveyed felt that the technology currently in use within their division was very effective.”
To be successful, carriers will have to implement six key technologies:
- An underwriting desktop that provides an underwriting workflow and document management solution nimble enough to adjust to different channels and underwriting models, work with different operating models and bring together analytics insights and the submission management needed for efficient underwriting processing.
- Predictive analytics has long been critical to the automation of homogenous risks, but the extent of its use is changing. New data sources and insights as well as more advanced analytics enable underwriters to use these tools on more complex risks
- An analytics platform that improves the carrier’s ability to gather, prepare, analyze and present internal and external data that will strengthen numerous underwriting processes, including the development of predictive models, the evaluation of individual risks and ongoing book vendor, portfolio and product management.
- A flexible policy platform. As carriers move to solution-oriented products and face accelerating competition, their product platforms will have to be more flexible. Customers will not accept outdated products and rates.
- Channel integration. Underwriting and technology needs will vary by channel, but underwriting still must be able to integrate with different channels to take in and process new business, service policies and maintain ongoing channel risk management.
- A flexible infrastructure, because the technologies described above will require it. The digital underwriter will have to work with the IT function to determine whether cloud-based infrastructures can be both cost efficient and sufficiently flexible.
Analytically-enabled services also will be critical for digital underwriters. While many carriers have turned to predictive modeling for at least some types of risk in recent years, that does not mean they are analytically enabled. A digital underwriter brings an analytics discipline and mindset to the full underwriting process. Four aspects of analytics are particularly worthy of consideration:
- Data. From the government to crowd knowledge to the Internet of Things, there is an explosion of new data sources underwriters can tap to evaluate risk or possibly use in predictive models. Digital underwriters should be identifying which sources could aid them.
- Experimentation. To quickly and efficiently explore and evaluate the value of these data sources, carriers should turn to cloud computing and software-as-a-service platforms.
- End-to-end process. Carriers should be examining how analytics tools can drive efficiencies throughout the entire underwriting process, not just risk assessment.
- Integration. To create value from the insights they’ve gained, carriers have to integrate them into underwriting processes beyond predictive models.
Next time: Cost-efficient approaches and channel-intimate approaches.
To learn more in the meantime, download this report: Evolving into a digital underwriter