Will Artificial Intelligence Replace Human Underwriting?

by Rod Giess

Will Artificial Intelligence Replace Human Underwriting?

Few factors within an insurer’s control affect profitability as much as underwriting. That makes skilled underwriters among the most valuable employees in the insurance industry.

But more and more, technology is being used in the underwriting process, just as it is in all other  areas of insurance operations. In fact, advanced technologies such as artificial intelligence (AI) and machine learning (ML) are dramatically altering the way underwriters function.

However, rather than worry that automation could possibly replace them, underwriters should take heart: These technologies will empower them to showcase their crucial talents.

Shedding light on dark data

More information is available for use in assessing risk than ever before. AI can swiftly collect and compile relevant data from social media posts (including photos and videos), blogs, online reviews, webpages and other publicly available sources.

Yet, because 80% to 90% of this data is unstructured, most of it ends up as dark data — information that is stored after being acquired but not used to any advantage. Except in high-value situations, it’s simply too time consuming for underwriters to sift through such a tremendous amount of information as they go about their work.

But AI tools can capture, categorize and validate data from a broad range of document formats, making it far more accessible for analysis. ML algorithms can even identify patterns and anomalies, connecting data points to generate insights that might otherwise go undetected.

Even so, these tools can only take the process so far. An underwriter is needed to analyze and manage this distilled dataset and use it for more accurate risk assessment, more competitive pricing and better portfolio strategies.

Don’t let it backfire!

Although more insurers are turning to digital solutions and tech tools to improve the efficiency of their operations, in some instances using all of these separate technologies with a legacy platform can be clumsy and actually reduce the efficiency of underwriters.

For the most effective results, the various solutions need to be connected in a single platform with an integrated workflow.

Through technology, savvy underwriters can shine

When routine and repetitive tasks are automated and vast volumes of data are easily accessible, underwriters can put their analytical skills to greater use. As a result, they can evaluate risk more accurately, facilitate sales and  approve more business.

They can also collaborate on product development, with the goal of improving customer satisfaction, retention and loyalty.

In short, using AI and ML technology in conjunction with an advanced policy processing platform will enhance the role of underwriters, allowing them to do what they do best: use their experience and expertise to review more “gray” cases, rather than looking at every piece of business that’s submitted.