As the insurance industry continues to cope with the pace of change, complexity and uncertainty in our world, Consumers continue to respond and expect companies to better respond to their needs. This year’s underwriting forecasts offer guidance on how carriers can respond more quickly.
1. Further development of cognitive technologies will help insurers capitalize on opportunities in more discrete market segments
Technological advances in AI and data analytics are helping insurers further refine market segments. As these more discrete segments grow, so does the opportunity for insurers to target them with new products and services offered through a broader range of digital distribution channels. One such channel is embedded insurance– Placing insurance in the customer journeys of non-insurance companies – for example, offering life insurance while applying for a mortgage.
New cognitive insurance platforms Underpin these new products and distribution channels and offer life insurance carriers the opportunity to take advantage of this opportunity. As these platforms continue to evolve, they hold tremendous potential for the underwriting function. These insurance platforms already automate evidence collection and make recommendations based on a continuously updated data analysis engine. With this level of automation and intelligence, underwriting decisions can be made in real time. Cases that require further review are then automatically routed to a human underwriter. With much of the evidence gathering already completed, the human underwriter can focus on further analysis, resulting in more efficient decision-making – a clear competitive advantage in fast-moving digital sales channels. We believe innovation in this area will continue to evolve over the next year. Actually our report Drive the future of insurance describes on page 11 how a life insurer in China is improving operational efficiency and customer experience through the use of AI and an intelligent algorithm.
2. Customer experience will continue to drive innovation in underwriting
Last year Underwriting forecastsI talked about how customer experience determines who wins in the digital competition for new business. We expect this trend to continue, but with greater awareness of consumer expectations and how insurers can respond more quickly to their changing needs. For example ours Accenture Insurance consumer study found that millennials and younger consumers are not the only cohort that enjoys a digital experience. The 55 and older age group is becoming increasingly comfortable with digital interactions. And if insurers want to attract and retain customers, a digital customer experience is crucial. Underwriting plays a critical role in supporting the digital customer experience, especially given the increasing proliferation of customer experience technologies available through ecosystem partners.
As our industry shifts from compensation to protection products, digital technologies will be critical to delivering differentiated experiences that leverage these platforms and ecosystems to capitalize on opportunities from new product innovation. We believe product and insurance innovation will be a significant source of revenue over the next few years. However, this requires expanded use of AI, automation, data analytics and cloud increase sales profitably.
As insurers modernize their legacy core systems and release siled data, they are able to automate their underwriting workflows to deliver a faster digital buying experience, while connecting to additional data sources that help them apply the appropriate level of risk management. This not only shortens underwriting periods and reduces costs, but also improves the customer (and underwriter) experience. Likewise, it supports the advanced experience consumers are looking for – seamless, proactive and personalized.
According to a Gartner® report (Richard Natale, Kimberly Harris-Ferrante, August 2022), “By 2027, digitally-enabled underwriting will have become mainstream in the life insurance industry, resulting in significantly higher revenues and underwriting profitability, as well as an improved customer experience.”
3. Human-machine operating models will help alleviate the skills shortage in underwriting
Digital technologies like AI and automation do not replace underwriting jobs. On the contrary: these technologies are becoming even more necessary as insurers face a persistent shortage of skilled workers. Furthermore, they will need a talent and investment strategy that targets digital skills in data analysis and no/low code capabilities and the use of flexible workforce to optimize the underwriting function.
For example, with the increasing use of third-party data, AI and automation provide an efficient way to capture data and make it usable for underwriters. This gives underwriters the freedom to do what they do best: assess and price risks—while enabling timely and effective decision making. What stops them from doing so is the administrative burden it requires 40 percent of their timeaccording to our Survey of 500 U.S. life insurance insurers.
The first step is to improve the efficiency of back-end underwriting operations. Interoperability is key to simplifying all customer-facing functions, including product distribution, marketing, sales, service and commerce, in addition to leveraging an integrated technology stack across platforms and ecosystems. The cognitive platforms described above can help here too. As insurers improve their digital capabilities to quickly respond to consumers’ ever-changing needs with even more discrete insurance products and distribution channels, underwriting capabilities must keep pace. This combination of humans and machines can enable a better experience for insurers and potential policyholders.
This is good news for the insurance value chain and reinforces my optimism about the ability of our industry and insurers to meet the challenges and opportunities that lie ahead. We are ready to help. Let’s talk about getting the most out of your technology and human ingenuity.
Drive the future of insurance: Modernizing technology, such as AI and cloud-based data analytics, is helping insurers achieve profitable growth, both through increased revenue and cost reductions.
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