Data is the new oil, so they say. While insurers are sitting on staggering volumes of it, more data doesn’t necessarily mean better. Previously, historical data was enough to underwrite risk. Today, underwriters need to cut through the noise and derive actionable insights to write profitable business. So, is the data explosion a challenge or an opportunity?
At Send’s latest INFUSE webinar ‘Data, data, data’ all the panelists outlined that data is the main driver of the current underwriting process. They confirmed that most insurers are pressing on data modernisation and are using data from brokers and third-party data sources to extract deep insights to write better business.
Kate Enright, Head of Data at Miller Insurance Services, is confident that by upgrading existing processes, skills of their current talent, and adopting modern technology, the industry can leverage the full potential of data. Ted Balanzo, Chief Data & Analytics Officer at Westfield Insurance, confirmed that there is an upsurge of insurance professionals who are fearless about AI and are upskilling themselves to augment the underwriting process. But Kelly Cusik, MD at Deloitte Consulting LLP, believes the industry as a whole still lacks data maturity to fully exploit Gen AI.
As insurers seek to make better risk decisions faster and gain a competitive advantage, are they shifting focus from a process to a data-maturity model? Read on.
Data is the current driver of underwriting
To make underwriting profitable, insurers have begun transforming their data infrastructure.
Property & Casualty insurers like Westfield Insurance are even using new tools, such as aerial imagery, to look at roofs, assess construction types, and many of those tools are now leveraging AI. What’s better, they are leveraging such tools across the entire life cycle, from ingesting to extracting information and even submission. On the broker side, Miller Insurance Services is using data to handle digital contracts, to enable the straight-through process and then utilize other platforms like PPL or White Space. They are also focused on APIs, especially on the delegated business. Deloitte Consulting LLP is using data to improve their portfolio management. To avoid a six-month lag, they are using underlying exposure data to monitor their portfolios in real time, which also gives them a good sense of their capacity and risk in certain areas.
Is data ready for AI in underwriting?
It’s a misconception that AI is new to the insurance industry. For decades, the industry has been doing advanced statistical modelling using AI for risk selection, pricing, triage and other areas. The new interest in generative AI is what is creating the buzz, and whether it can be used to unlock unstructured data. Kelly Cusik feels that there is a lack of data maturity among underwriters that can be a hindrance to fully adopting generative AI right away.
“From the business lens, I think we’re still on a path of maturity with respect to AI and Data. There are many questions like, do I understand the data that’s being used to present something to me? How do I get better trust in that data? And where is it going in the future so that I can start thinking about training my people, thinking about job roles, thinking about ways of working?”
-Kelly Cusik, MD, Deloitte Consulting LLP
Is your data strategy aligning with your business strategy?
To leverage the value of data, Kate from Miller Insurance Services says they are following several key steps. The first is to look at their executive sponsorship, analysing the budget and allotting the right funds to improve their data infrastructure. During the webinar, Kate mentioned that her company worked with Gartner to develop a framework to illustrate the degree of business transformation that data can bring to the table.
“We’re trying to focus on productising data, because the data team can’t do it in isolation. To truly start to transform and gain value from our data, we need to make changes and enhancements across our processes, people, and technology.”
– Kate Enright, Head of Data at Miller Insurance Services
Not all insurers are hesitant about Data and AI
The level of data literacy among insurers can vary significantly. Since the industry has had a mixed response to adopting AI and data modernisation, Kate’s company, Miller Insurance Services, has developed an employee model that categorises stakeholders by their ability and their willingness to adapt to AI and Data. Based on Gartner’s advice, the company invests time in those people who are most enthusiastic and ready to get involved. This focus helps them to optimise, engage, and accelerate the adoption of their company’s data–driven initiatives. At Westfield Insurance, Ted Balanzo says they are working at the grassroots level to promote the adoption of AI. They recently hosted an AI day for their employees and saw significant participation and interest from them.
“We had a representative from OpenAI come on-site and had over two hundred employees show up. And we gave them tools and broke them into small workout teams, and you’d be amazed at some of the ideas that they came up with. They certainly understand that technology is here to supplement their work and make their lives easier.”
– Ted Balanzo, Chief Data & Analytics Officer, Westfield Insurance
As the webinar closed, the panelists shared their final thoughts on the future of Data and AI.
Kelly Cusik urged insurers not to get distracted by the machines and technology and neglect the human side of insurance.
Ted Balanzo assured insurers that the industry is already sitting on massive data that can be leveraged, and there is no need to spend millions of dollars on a data transformation project to be successful.
Kate Enright said insurers are unlikely to gain an advantage from data without a clear revenue or value-driven strategy. She urged insurers to spend about half of their time developing the value story, a quarter of their time developing the numbers, and the remaining time making their data more engaging and captivating.
The underwriting evolution has shifted away from focusing on process and cost to now harnessing that investment and marrying it with highly accessible third-party data. In this data-driven world, there is an opportunity to not only improve underwriting efficiencies but to fundamentally transform what underwriters do. It’s time to make the change now.
Keen to learn more? You can watch a recording of the webinar here.