Automated insurance underwriting can verify the risk associated with a client by working in sync with the insurance company's underwriting guidelines. Such immense possibilities ascertain greater profits for the insurance companies and enhanced customer satisfaction through more personalized policies.
Why is it Gathering Traction?
More than 50% of the consumers stated that insurance companies are trailing other industries to leverage technology to their benefit. While insurance companies were sluggish in coming to terms with the fast-paced technological advancements earlier, the onset of the COVID-19 pandemic has served as the wake-up call to make insurance purchasing simpler and more digitally enabled.
Automated Insurance Underwriting possesses the excellent capability to handle less complex cases, freeing up underwriters to address more complex issues on hand. With easy access to a digital assistant, intelligent automation aids insurance people to interact with the user in real-time and understand, assess, cater to, and manage his requirements through a simple interface. Moreover, to meet the changing expectations, the insurance industry needs to improve responsiveness and make better use of technological advancements.
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Why Manual Underwriting is Losing Steam?
Manual Underwriting is marred with challenges such as poor customer experience and high customer attrition, low underwriting efficiency and profitability; poor risk management & pricing; and lower Underwriting and risk ratios. Moreover, in this digital renaissance age where consumers seek 24-hour access and quick delivery, clear & relevant information about a product's features, etc., insurance companies need to quickly up their game with the help of automated insurance underwriting.
Head-to-Head Comparison: Manual vs. Automated Insurance Underwriting
Manual Underwriting can bring in the comfort of personal touch to attract more clients. However, it's an awful lengthy process. The accuracy and speed of Underwriting aren't as reliable as they would be in automated Underwriting.
Long-drawn manual form-fills, complex fineprint, errors and omissions in Underwriting, long turnaround times, higher premiums, lack of product personalization, and predictive services are all the factors that turn customers away from manual Underwriting. Drawing up and sending quotes for commercial insurance to clients can easily take up 2-3 days, even in the most efficient manual underwriting-based operations.
AI-based underwriting systems empower insurers to deliver a better customer experience at the sales stage and build loyalty from the first contact with the customers. It automates low-complexity tasks and frees up underwriters for more complex interactions with the customer. Once that happens, insurers can focus their attention on a long-term retention roadmap based on personalized account servicing and lucrative pricing models.
Looking at the potential it holds, leading insurers have already started working towards upskilling their underwriters to take on more complex roles and to adapt to highly satisfying and work enabling digital platforms.
Pricing and Risk Management
Every application has a new set of risk variables that are becoming more and more complicated to assess and account for with precision.
Manual Underwriting has inefficient pricing, quality issues, and probable procedural errors. The top and bottom quintile of performers logged a 23-28% difference in the loss ratios. Manual Underwriting is error-prone in creating risk profiles or assessing the amount of risk required for each individual.
Using Automated Underwriting, Artificial Intelligence is leveraged to assess an application against billions of data points. Underwriters gain visibility into the most relevant risk factors associated with client profiles through the use of big data and associated algorithms.
AI-driven underwriting system assists underwriters in quantifying unstructured and quantitative data points. AI-driven automation in Underwriting brings complete risk visibility into a case. It thus helps in suggesting the best possible quotes and coverage to the underwriters.