Underwriting Transformation with Digital Landscape
While there is digital disruption across the ecosystem can underwriting, the core risk assessment function of the insurance enterprise be insulated? Various factors are impacting the underwriting function viz. changes in consumer needs, technology adoption, consumer buying behavior, business and distribution models, and regulations. These are enabling insurers to relook at underwriting holistically.
Segments of the underwriting portfolio can be further dissected to explore opportunities opened up due to new business models, automation, straight-through processing (STP), data acquisitions, data model-based pricing, sub-segmentation etc. With the emergence of new data acquisition techniques with IOT, information gateways (medical/ health/ claim/ ratings records bureau), consolidated citizens data etc can aid in automating various manual tasks with various forms/ documents. This information ingestion has been a critical bottleneck for automating rules-based underwriting, risk segmentation, intelligent workflows, 360 degree case management and last but not the least, ongoing learning and rules kaizening.
With the surge in adoption of digital transactions by consumers and also opening of the regulatory restrictions post-covid, underwriters will be able to expedite automated rules based decision-making based on insightful risk scores, quicker turnaround with field underwriting, data intelligence based refinements using analytical propensity, claims, lapsation models etc.
Critical capabilities for Efficient & Effective Underwriting Case Management
Case management and better pricing capabilities go hand in hand, and can deliver profitability only when leveraged with an optimal blend of expert underwriting and data based analytics. Various empirical analysis on expert rules based underwriting have universally sought few key capabilities as critically needed for effective and efficient underwriting case management.
How to increase STP cases
Continuous analysis of decisions and pattern of same will provide cues for which decisions can be further automated. This iterative process to add further information (questionnaire/ document) and effect more improved decision matrix (refined rule).
Thus, kaizening of rules is a continuously iterative process to improve STP %.
Managing UW transformations
While same may look basic, the correct implementation of the said practices determines the success of the case management in any Life insurance. With continuous insights and quest for improvements, boundary line shifts. Insights emerge with new patterns if monitoring and managing the boundary line cases is effective and very critical for kaizening of rules.
Readiness for collaborating with Insurtech with information gateways (medical/ health/ claim/ ratings records bureau), and abilities to create insightful proposition for niche target prospect data to the extent of segment of one will be critical.
Since 2008 connected devices have outnumbered people and one Mckinsey study anticipates the same to cross 50 Billion connected devices by 2025. This emergence of new data acquisition techniques using IOT, consolidated citizens, health records, claims records data etc can continuously aid in automating more manual underwriting tasks replacing conventional form and document-oriented processes.
Emergence of New Age Business Models and impact on Underwriting
Disruption is being noted in unconventional offerings where pricing is refined to such a narrow segments based on data analytics so as to offer bundled and pre-underwritten policies to narrow customer segments or to segment of one. The pricing offers can be so created based on the customer data insights and turning the conventional process with refined offer for a niche target segment and is more easier with the digital operating models.
Another alternative model evolving is on the usage-based insurance (UBI) esp. in + auto insurance where pricing models get further refined for the segment and variables are refined to the usage level as you drive / ride. This has been better enabled with use of telematic devices in vehicles. + Rewarding the customers with healthy lifestyle, who allow sharing of critical health data with use of wearables / fitness app.
Author: Mangesh Vaitla, Co-Founder & Executive Director, C2L BIZ Solutions
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of IIA and IIA does not assume any responsibility or liability for the same. This blog was originally posted on the C2L BIZ website.
