The future of underwriting
A transformation driven by talent and technology
As insurers look at large-scale and transformative investments in their front-office capabilities, there is widespread consensus that the role of underwriting can — and must — significantly change if insurers are to modernize their operations and infrastructure to meet rising agent, business owner and consumer expectations.
Moving forward, the focus of underwriting will shift away from internal processes and specific transactions and emphatically toward market-facing relationships and sales, giving underwriters more involvement than today. Increased automation and stronger analytical capabilities will also be a big part of the story.
Rethinking the possibilities
Tomorrow’s top performers in the insurance industry will have underwriters who play considerably different — and higher-value — roles than those they play today. In fact, future underwriters will often act in ways that resemble other roles, including:
- Sales executive
- Decision scientist
- Customer advocate
Underwriter as sales executive
Underwriters’ access to information and “big picture” views of desirable customer types make them well positioned to understand the specific characteristics that make a good lead. The same insights are also useful in shaping promotional campaigns and playbooks for cross-selling, up-selling and account retention programs.
- As underwriters take on new responsibilities, their performance will be assessed in ways that go beyond conventional measures to include more sophisticated sales, service and portfolio metrics.
- Underwriters will rely on integrated marketing and sales platforms referencing both internal and external data such as real-time news feeds, social media updates and research.
- Semantic web technology will apply rules to aggregated data to synthesize and filter the most relevant information and events and minimize the risk of overwhelming users with data.
- Trends in sales pursuits can be assessed to identify patterns and apply similar criteria to other opportunity areas; benchmarks around risk attributes can be evaluated and leveraged for better pricing elasticity.
Underwriter as decision scientist
The “analytics revolution” that has altered the insurance landscape will have significant impact on, and benefits for, underwriting.
- Multiple statistically based models will be used by skilled risk evaluators along with codified, heuristic underwriting rules to achieve new levels of sophisticated analytics and rules-based decision support.
- The ongoing evolution of predictive modeling will drive finer levels of granularity in analytical and transactional model development, expanding the underwriting process into the realm of prospecting, sales pursuit, account retention and account servicing.
- The emergence of new data aggregator services (e.g., customer “data banks”) will support customer data ownership and facilitate insurer access.
- Interactive analytical tools will offer “what if” scenario modeling and information visualization.
- Machine learning will enable continual assessments of data for detection and analysis of anomalies and nuances to improve precision of models and rules.
Underwriter as customer advocate
As the customer experience takes on new importance, tomorrow’s underwriters will help shape the solutions across the network of relationships required to meet higher agent, business owner and consumer expectations.
The focus will be on building and enabling a “team approach” to account servicing via collaborative tools. When managed effectively, this holistic environment will lead to increased customer loyalty through better solutions which, ultimately, means higher account retention.
- Information access will be democratized across the network of account team members and made available through dedicated account sites.
- Account teams will connect via account-specific sites to share information, collaborate on documents and consult on issues.
- Information is continually searched, interrogated, analyzed, packaged and delivered to the account team, with the objective of keeping everyone current on the insured’s business events and activities.
Underwriter as innovator
Competitive differentiation comes not only from strong agent and broker relationships, account risk assessment and servicing, but through truly unique insights into industries and buyer preferences.
These insights must be codified into products and services tailored to the distinct needs and issues of those customer micro-niches to deliver compelling value propositions to both the agent and the insured.
- In developing new products, underwriters can help define the core elements — including relevant rules and pricing frameworks — that are necessary to build standardized product architectures from which tailored offerings for specific market niches can be efficiently launched.
- They can help determine the most valuable insights from third-party data and customer behaviors, which will be key to reshaping interactions with customers and agents, as well as the cross-functional, end-to-end processes that must support multichannel environments.
- Underwriters can help insurers figure out the optimal ways to use sensor-based technologies for constant monitoring of customer exposures and real-time pricing and policy term modifications. Such technologies can help optimize insurance protection and “elasticize” premiums.
The bottom line
To discuss the “future of underwriting” shouldn’t discount the need for near-term action. The advent of powerful new technologies will determine much of that future, but cultivating the right talent will be as important as deploying the right tool sets.
For practical and strategic reasons alike, underwriters have a clear and urgent opportunity to build their own future and also shape the future of the industry as a whole. And, as the saying goes, the future is now.