The underwriting industry found itself at a crossroads when the pandemic broke. With very limited knowledge of the pandemic’s nature, trajectory, and impact, the industry was compelled to pivot and adjust to the new normal. This meant accelerating the adoption of new ways of working. Moreover, there was a need to implement contactless and digital solutions overnight, since the entire industry could not conduct patient medical exams for underwriting purposes.
We realised a need to conduct assessments and process applications differently, as more people worked remotely and were apprehensive about face-to-face contact. Fortunately, customers are also increasingly adapting to digitisation and have become more comfortable using these digital applications.
We recently launched the first part of our digital application and underwriting engine, which enables advisors and brokers to contract either remotely or face to face with clients.
Remote selling in an advice market was unthinkable before the outbreak of Covid-19. Previously, if a client was in another province, the advisor would have had to book a flight, take time off work, and incur expenses to see their client across the country, which would have made the process laborious and time-consuming.
However, the picture looks decidedly different today. Digitalisation of underwriting eliminates the need for lengthy phone calls and reduces the need for extensive medicals. Using our digital platform, most of the time a relatively healthy client may only need an HIV test, or no blood tests at all. We see many scenarios in which clients are able to get cover without having to undergo a medical exam. With third-party data, underwriting will become even more hassle-free.
More than just convenience
Without a doubt, underwriting has evolved since the Covid-19 pandemic broke. The adoption of straight-through processing will enable the industry to realise significant cost benefits for clients. In turn, this will potentially translate to a reduction in premiums and pricing for consumers. Digitalisation is not only convenient for clients, but also provides long-term benefits.
As underwriting processes have become more digital, they have also become more customised. Every individual is unique, and therefore underwriting should be tailored to his or her unique circumstances and needs. The underwriting process has become more intuitive with reflexive questions relative to the specific profile of an applicant.
For example, if a client has been diagnosed with hypertension, the underwriting questions will be relative to their condition. The clearer the healthier cases and minimal health impairments, the higher the chances of needing no medicals. However, clients with existing medical conditions may still be required to undergo medical tests; we are not eliminating the need for those tests. Each case will be looked at on its own merits and the medicals we may require will be tailored to the client’s risk.
The Human Touch
Digital and contactless underwriting have not spelt the end of the conventional manual process. There are still some advisors and clients who prefer manual application and underwriting – hence we still cater for both processes. In spite of this, the digital process has seen immense benefits in terms of convenience, ease of business, speed of contracting, and reduced time to issue. Considering the ease and speed of digital underwriting, we expect more of our advisors to use it, as it offers both advisors and clients real-time feedback on the outcome of their application.
While there are concerns that the increased digitalisation of the underwriting process will eventually nullify the advisor, advisors will remain a key component of the advice and sales process. We have found in the past that when it comes to insurance, clients will conduct their own online research. However, they will still seek expert advice to conclude the sale. While clients may have gathered all the information they need through their research, they will probably still require the help of an advisor to complete the process. Fears that the role of the advisor in the sales process will eventually become extinct are exaggerated. We can confidently assert that digitalisation will not nullify advisors or make them redundant in the process.
A new breed of underwriters
The underwriting industry is certainly changing and will continue to do so as a result of digitalisation. However, statistics indicate that the impact of digitalisation on advisors will be negligible. Going forward we will see the emergence of specialised and highly skilled underwriters who will need strong analytical abilities and communication skills to interpret data and form rules around it. These new-age underwriters will be required to understand, explain and apply the data inputs they receive from Internet of Things (IoT) sources such as artificial intelligence (AI) and data aggregation.
This data would need to be interpreted for actuaries, salespeople and customers. These underwriters need to have the ability to derive the answers without having seen any physical medical evidence. They will need to use AI and other applications to improve and enhance risk management, which will be a big part of their role.
COVID-19 is an example of an event that compelled the industry to adapt quickly – we had no data and we had very little knowledge as to what could or was going to happen. No amount of AI will have that information either. So, a new breed of underwriters would need to know how to do the research, adapt and use the AI appropriately.
Better for clients
It is anticipated that digitalisation will gain more traction in the underwriting space with an increase in digital offerings. Potentially, we foresee the emergence of more digital tools for advisors and increased usage of third-party data sources.
Notably, we expect the underwriting process to become continuous and not simply a once-off process that is only limited to the application process. So, instead of having one snapshot of their health at the time of underwriting, clients will have an ongoing picture that evolves with their circumstances.
What this means is that currently clients are loaded and contracted on the basis of the medicals submitted at the time of the application. Ongoing underwriting allows for clients who are managing their health effectively to benefit from a regular review of their status. Information on the clients’ health status can be obtained on an ongoing basis, allowing the system to make the necessary adjustments that would be beneficial to the clients.