Insurance guarantee can make a competitive difference. Most insurers do not argue for this fact. However, is the difference sufficient to undergo a comprehensive insurance transformation? Yes, but what if underwriting could go a long way without a major transformation? What if new technology could bridge the gap between almost any type of system? What if the technology itself could serve as a system for re-learning processes-advancing guarantees when it dramatically improves insurance performance? This is the promise of digital technology applied to insurance. It is now possible to do more and map a course for change that improves as it educates itself, while utilizing the underwriter's expertise.
Commercial insurance is in the middle of this shift .
Commercial line insurance companies are now presented new opportunities for digitally optimized guarantees that will forever change the way they do business. It will match customers' expectations, serve brokers well and alleviate some of the burden that had previously been placed on insurance. Of course, insurance in all lines of insurance has gone through a kind of existential dilemma. What should an insurer be? What should the role of the underwriter look like? Is technology changing the definition of underwriter or will we one day call insurers something completely different?
Although the essence of underwriting (risk assessment and selection) can never change, the role of the underwriter will definitely change … for the better! New tools and new data sources provide new insights. Automation will streamline and improve risk assessment. Better transparency in business books makes it possible for insurers to guide the business in an expert way in which risks to take out and which directions it needs to go.
In last week's blog, Mike Adler, Principal, KPMG and I reviewed the business case of a next generation underwriting workbench, jointly developed and soon launched by Majesco. It's released at the perfect time, as commercial line insurance companies are considering new insurance methods that include a transformation of people, data, technology and processes.
To give us some perspective on these industry changes, we asked experts from KPMG, Strategy Meets Action and Majesco to participate in a Majesco webinar and demo entitled The Next Competitive Frontier of Commercial Underwriting: Innovation and Transformation [1
Deb Smallwood – Senior Partner, Strategy Meets Action
Lulu O & # 39; Leary – Partner Financial Services, KPMG
Jeanne Johnson – Chief Counselor in the United States, KPMG
Nishit Shukla – VP Product Management, Majesco
We started by considering operational perspectives. I asked the panel,
“If we were to redo the commercial warranty process what do companies need to keep in mind when considering using a next generation underwriting workbench in a very digital world? ”
Jeanne Johnson, KPMG
” We see a lot of movement in the digital underwriting workbench space. I think insurers need to consider the most important things that really drive not just digitization, but what features, functions and drivers that really shape where insurance can go? "
Lulu O & # 39; Leary, KPMG  " One of the really important driving forces for change is data. Most insurance companies have a huge amount of data, but they do not use it as efficiently as possible. They realize that data … alongside digital activation … along with machine learning can actually be a turning point in the industry.
The information, Lulu pointed out, will allow more companies to sign automatically, so the role of underwriter will change.
“We are very much moving towards a situation where the insurer will become more of a portfolio manager than actually an insurer. This will not happen in the most complex commercial operations, but certainly in many other segments.
Strategic opportunity as a driving force for change in underwriting
Access to data has facilitated better risk analysis in the past, but there are growing new data sources as well as combined sources that now drive innovative commercial insurance companies to change their insurance strategies. For example, when it comes to applying for new insurance, many commercial insurance companies still often take "what they get". The person who enters the broker or agent's door is a candidate. This can be changed with an underwriting methodology that is suitable for better proactive sales focus. Can a digital-first-underwriting workbench rewrite the rules of sales and distribution?
Lulu O’Leary, KPMG
“Insurance companies are looking for ways to change their distribution strategy. New methods of subscription can place insurers at the forefront with brokers, aimed at the customers they want to work with instead of just responding to submissions. We are moving very much in a direction where commercial guarantees will be much more strategic when it comes to distribution and customer acquisition. It will be more portfolio-driven across the segment when it comes to how warranties do their job. They will be able to prioritize and reinforce the risk appetite with the help of data. Of course, most companies still use old systems and as a result, the journey must be taken in stages.
The short-term goal for commercial line insurance companies should be to understand the possibility. Majesco, for example, never starts developing a new product until we understand how it will improve the experience for all parties. We examine our customers about what they see coming and we take the pulse of industry experts, such as our panel, to see which experiences are ripe to improve. In our webinar, Deb Smallwood reviewed the potential experience enhancements for commercial insurance companies.
“The industry has been digitizing and automating and optimizing for several years, but this new technology will really enable us to renew the roles and processes. Imagine sending information to insurers' fingertips the moment they need it. Zero staff is engaged in data entry or information gathering. The subscription period is spent creating customer value, proactively solving problems and pleasing agents and brokers while protecting and truly balancing the end result with precision pricing. There is no wrestling with raters and tools and spreadsheets and handoffs. The guarantee has a power of attorney. They can look at the entire portfolio and change the work performed if needed. Brokers and agents also share the positive experience, full transparency, rocket reversal and consistency. It is possible to get to this point today with the technology and the tools that are already available in the market.
From sequential underwriting to straight-through underwriting to real-time intelligent underwriting
What Jeanne, Lulu, and Deb have described is a capacity set that transcends data usage and delivery with automated advanced analytical decisions, but it will also get commercial line carriers to imagine roles and rewrite processes. Deb and Nishit both had input on these process improvements.
"Right now information is coming in. It is very sequential. There is a hand-off. It is a two-way collaboration. What we need is to consider process and functions rather than a sequential transaction. So when we start looking at technology activation, insurance companies need systems and workbenches that can receive data and input from any source. They must handle the cooperation well. Our IT systems must absolutely come to this uncoded, low-coded place where we have less IT dependency, so that we are flexible and agile to be able to change products and processes.
“The new intelligent insurance platform is a platform that lies on top of your core systems. It uses microservices and is API-native so that data can flow in and out and there is more plug and play. It can be headless or have an advanced user interface. It is completely flexible. It could be the printer's desktop, or it could be a technology warehouse just sitting there. The workflow is untraditional. It is regulated and gives the insurer information when they need it for the type of risk they take out.
What Deb described is designed for future commercial lines, but it will soon be released in Majesco's new Digital Underwriter360 for P&C. When Nishit showed a demonstration of the functions of the front-end workbench, he described the reality of what is happening in the background … everything that insurers used to do manually, which is now automated and consistently improved through AI and machine learning.
“Let's say you have a small business and the broker has submitted the required application. They just want to make a quick submission to get a quote so they know what the premium will be before issuing the policy. You drag and drop the program and it activates the AI engine, collects all property information, location information, demographic data and so on. It automatically fills in the data summary. It is a low-touch application where nothing needs to be done manually to take advantage of all the different integrations. The end user does not care where the data comes from and they have the ability to override everything the automated system has done. It is very intelligent digital underwriting.
The evidence is in the results
As part of the demon, Nishit explained how AI technology can help turn data sets into useful, visual stories that help insurers both see and make better decisions. He also discussed how useful the portfolio view is for confirming that underwriting does its job of assessing risk.
"Some guarantees will actually say that they could survive without any of these new portfolio viewing features … by simply analyzing cases and issuing policies. But we can take it to heart. the next level and take advantage of data, validate AI and allow the insurer to decide on the larger portfolio. ”
Lulu O & # 39; Leary, KPMG
“ The part that helps us transform and convince insurers to really embrace data and analytics and AI shows them results.So, make sure we can prove to them that if they did not use this data and they did not use that model, they would get different and less desirable results.The reluctance to embrace it this kind of progress over the years is obvious, but if we can start to show success and optimal data pricing, I think we will get more adoption. ”
Where risk meets reality
Underwriting has evolved. Initially, manual assessments were calculated. Then the math came into play. Estimates and prices became more complex. The regulations came in. In many ways, the insurance proposal was about dealing with the unknown factors by manipulating mathematics and adjusting risk tolerance. Today, the unknown evaporates. Underwriting, pricing and profitability can be seen with greater transparency and more detail – whether it means looking into the richness of detail or taking a 360 ° view of the entire portfolio.
Risk meets reality, perhaps for the first time, and reality changes how commercial line insurance companies can distribute and subscribe.
Are you ready for change?
Get an Insight Into the Future of Commercial Underwriting by Watching, The Next Competitive Frontier of Commercial Underwriting: Innovation and Transformation