Why is AI’s influence on the transformation in insurance underwriting so important?
It’s important because insurance companies are struggling with productivity and profitability.
AI can help to elevate the role of an underwriter to one where they’re really able to focus on the risks they want and the relationships they’re building, rather than having to do lots of research before they can even decide which risks to work on.
How engaged are underwriters with AI at the moment?
Underwriters want to use AI as a tool, but today they are still doing a lot of very attritional work, such as data gathering and data rekeying, as well as juggling different systems to give them a slightly different picture.
Under those circumstances, it’s difficult to get your head above the parapet and think: “what risks do I want, which brokers do I need to spend more time on, which new partnerships do I need to work on?”.
With AI, we see the underwriter role becoming much more of an orchestrator and choreographer of their portfolios. There will be less work where they’re in among the weeds of individual risks, adding all the data and rekeying all the risks.
AI is important economically for productivity and profitability reasons, but also in terms of the future of the role of the underwriter—it has to be much more of a choreographer role than it is today.
Could AI signal the end of the job title ‘underwriter’?
As AI gets more sophisticated, the role of underwriters will move closer to that of portfolio managers. Underwriters will be looking at how the book or the portfolio develops as a whole, thinking about risk in relation to the portfolio.
In the future, there will be one role that will be a lot more analytical and strategic, and another role that will be a lot more sales-focused and relationship-focused.
The latter is more like a relationship manager in banking, focusing much more on the relationship between insurance companies and their key brokers.
The role will become more polarised than it is today. Instead of the underwriters feeling that they have to do everything, some underwriters will move towards being analytical portfolio managers.
There will be other underwriters moving more towards broker relationship management. For the latter, the focus will be on how to articulate the appetite and how to get the right submissions coming through.
What other changes are you seeing?
We’re seeing an increasing desire of underwriters to learn from each other and share best practice. This has definitely been heightened by people thinking about the new normal and, post-COVID-19, how insurance companies might choose to work.
We’ve seen Nationwide in the US decide they are going to continue with remote working for their employees for the foreseeable future, for example.
More generally, we expect to see underwriters clamouring to have more digitally enabled collaboration. For example, junior underwriters will want to learn from more seasoned ones, to understand best practice and collaborate, as remote working becomes more prevalent.
AI will help with that and tech will too. It will lead to underwriters accelerating how they can realise their potential. On-the-job learning driven by AI can highlight what you can do more of and how you can get better rates out of your conversions.
I see some of those technologies really maturing in the next year to two years.
The role of AI is to elevate the human. I think of AI as almost like a coach—it’s riding sidecar next to you, giving you on-the-job recommendations and helping you get better at everything you’re doing.
“We’re seeing an increasing desire of underwriters to learn from each other and share best practice.”
Richard Hartley, Cytora
This article was published ahead of the Intelligent Insurer webinar “Underwriting Transformation: Leverage AI to Win Better Risks and Build Stronger Relationships”.
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