For decades, underwriting has been both an art and a science. With the advent of AI, this discipline has evolved into a third dimension. Today, a new variant, generative AI, has begun revolutionizing tasks by summarizing submissions, streamlining data, suggesting data-driven policy recommendations, and more. However, is the modern underwriter willing to adopt Gen AI as an underwriting assistant?
According to Capgemini Insurance Report 2024, only 8 percent of underwriters are consistently outperforming mainstream carriers by leveraging AI-driven insights and automation to make informed decisions and accurate risk assessments with efficiency. Do you know why? We may have found the answer.
During the fifth session of our webinar series ‘INFUSE’ titled: The Underwriting Maturity Framework- Moving from a Process-driven to Data-driven Operating Model, featured two digital transformation experts from Send: William Harnett Head of Customer Strategy and Success, alongside Lloyd Peters, Head of Revenue, who diagnosed the fears of Gen AI among underwriters. The panelists confirmed how Gen AI augments manual underwriting and cannot replace the core skills of an underwriter. The experts suggested the Underwriting Maturity Framework model as a reliable springboard to transition from manual to smart underwriting. Can underwriters finally go from manual to smart underwriting without the Gen-AI-nxiety?
Underwriters are overwhelmed by ‘Data Complexity’
Today, insurers have access to staggering amounts of data. However, navigating through Gen AI data requires a deep understanding of various large language models to gain access to the right information, while accurately assessing and pricing the risk. This, along with the mounting pressure from insurers to make better risk decisions faster, has overwhelmed the underwriter.
Harnett confirms that insurers are making the big shift from a process-driven to a data-driven model, and underwriters can make a smooth transition if they can assess their current point of evolution on the maturity model.
“If you want to move to the next level of underwriting, you have to take a step back and assess where you are at, where you need to get to, and how you want to get to your desired level of maturity. Top insurers have already begun the big shift from a data-driven to a process-driven underwriting model. The good news for underwriters is that there is now an underwriting maturity framework model that helps them evaluate their position.” -William Harnett, Head of Customer Strategy and Success, Send
Process-driven vs. data-driven; which approach is winning?
For the last 10 years, insurers have looked to maintain a uniform underwriting process to avoid anomalies. The goal of process-driven underwriting was to eliminate unnecessary costs, improve profitability, and stay competitive. Today, insurers understand that by mining real insights, they can not only improve efficiency but also increase customer satisfaction. Hence, there is a big shift as carriers look to harness either first, second, or third-party data that helps them with consistency in risk selection and more importantly, accurate pricing.
The focus now is on the evolution of underwriting through the use of data, and the emphasis is definitely on factors like risk selection, pricing, customer centricity, and AI enablement.
The good news is that there is now a free tool for underwriters to evaluate themselves to stay on top of this big shift from process-centric to data-centric underwriting.
Self-assessment: The key to moving from manual to smart underwriting
The first step underwriters can take is to evaluate their current position on the underwriting maturity framework model. This model displays a powerful visual of an underwriter’s current capabilities, allows them to identify both independent and interdependent business priorities, and accordingly identifies their level of maturity so they know where they’re starting from. There are five stages to this model, and each stage signifies the current capabilities of the underwriter.
Stage 0: Manual Underwriting
Stage 1: Digital Underwriting
Stage 2: Connected Underwriting
Stage 3: Augmented Underwriting
Stage 4: Smart Underwriting
The maturity framework allows underwriters to analyze each stage of the evolution, and identify capabilities that mature as you move from a process-centric operating model to a data-centric operating model. This also allows carriers to identify gaps and prioritize investments in technology and resources accordingly. Peters mentioned how “the maturity framework model streamlines organizational functions such as operations, data analytics, and IT, fostering an integrated approach to underwriting.”
Where does today’s underwriter sit on the maturity framework model?
Peters suggests that the median stage at which underwriters sit is between zero and three. However, most of the industry is still at stage zero. This doesn’t mean that underwriters must go through each stage of the model. If underwriters are comfortable with foundational components like control of data, a single view of data, and solid documentation storage that can generate insights and recommendations, they can skip stages based on their level of proficiency.
As the webinar ended, the panelists shared the next steps for carriers and underwriters who are looking to move from process-centric to data-centric underwriting:
Harnett said that insurers must immediately look at their business priorities and lay down tight strategies, as it takes a village to bring about a big shift.
Peters urged all insurers and underwriters to think big, start small, and act fast.
One of the primary goals of the underwriting maturity framework is to get underwriters to start thinking about change. Business transformation begins with uncomfortable conversations. The underwriting maturity framework is a practical, digestible way of making the big shift from manual to smart underwriting. The underwriting evolution is here. The tools are available. The potential is significant. Now is the time.
You can watch a recording of the webinar here.