What's Happening?

Data: The underwriter’s new superpower



The rapid advancements in technology that we are currently seeing has influenced underwriting in many ways, with the most profound change relating to the use of data insights, as insurer and reinsurer systems become better at collecting, analysing and interpreting data.

This has a huge impact on underwriting decisions for both insurers and reinsurers, who can now look at portfolio information and analyse trends more easily with advances in data science, artificial intelligence and decision trees. What this does is give underwriters the ability to use both data analysis, as well as experience or gut feel to make decisions.

Another trend that we are witnessing is that technology is being used to streamline business, making transacting easier. This is particularly useful for small and homogenous clients within an insurer’s portfolio, which can be underwritten or renewed automatically, without any human intervention.

Hence, automatic renewals, digital proposal forms and self-service portals used to generate quotes are all tools that are being used for smaller and simpler business transactions. This is great news as it frees up processing time to allow underwriters and brokers to spend more time on underwriting complex risks and building relationships.

Technology is not a threat

However, while technology is undoubtedly a useful tool, it comes with concerns. As we’ve seen in many other sectors, the relentless pace of technology has prompted some to question whether the insurance sector is in danger of seeing some roles becoming obsolete, with concerns specifically being raised about whether we are at risk of seeing underwriters potentially being replaced by artificial intelligence.

In my view, this is not something that we need to worry about – underwriters are here to stay. What will happen is that the underwriting function will be more data driven and processing time should be reduced through automation – but there will always be a need for experts to underwrite complex speciality risks where experience, detailed understanding of a specific risk, risk management and relationships will be more important than ever.

Of course, for those underwriting high volume, simple risks, a great deal of underwriting can be automated. But in a business like iTOO, where we focus on niche, speciality and complex risks  – many of these risks are also new and emerging – the need for expert underwriters has never been more crucial.

Given the adoption of hybrid work models and the lessons learnt from the pandemic, it has become the norm that insurance advice can be dispensed either in person or digitally, but underwriters should understand what type of information is best suited to which platform.

Choose your data

General information and basic advice can be dispensed very effectively via digital media, such as short video content that can be viewed anywhere, at any time. My view remains, though, that risk-specific advice and more complex advice are still better managed in person.

However, in a world of information and increasingly complex risk, where expert advice from an intermediary is playing an ever more important role, the massive volumes of data at hand can be overwhelming, making it difficult to gain useful insights.

My advice to intermediaries is that now is the time to get to know your clients like never before – walk the factory floor with them, visit their premises, ask them about their fears and their dreams.

Then, you need to partner with experts – insurers who have deep expertise in many fields of speciality risk – attend training, understand their products and the cover available and work with them to find the best solution for your client. In essence, you should work with your client to find the solution that is most suited to them and use technology as a tool to deliver expert service.

More information does not necessarily mean better information, so as an intermediary, pick insurer partners that can support you and your clients. Of course, many brokers have speciality teams as well and these brokers should work with experts to develop the best solutions for complex risks.