A host of economic and technology trends are driving accelerated change for insurers and their commercial customers. These movements include evolving customer demands and rising expectations; a more disruptive and volatile operating environment; an increasingly digital, interconnected and competitive economy; and the growing capabilities and influence of technology, data and insurtech companies.
The old way of doing business will no longer suffice.
The next generation of commercial underwriting is taking shape and insurers are seeking to unlock the potential of their underwriters for competitive advantage. Forward-thinking insurers are embracing change and investing in their talent, culture and technology.
It all starts with talent. Best-in-class companies are building greater capability and adaptability by investing in their commercial underwriting talent. This is particularly important in terms of building the knowledge and skills of underwriters with regard to applying big data, advanced analytics, and artificial intelligence.
The underwriter of the future will leverage big data, advanced analytics and artificial intelligence, while applying judgment to better understand the complex environment and dynamic shifts in risk, loss and pricing patterns that their profession demands. While technology will assist in keeping underwriters informed, they will need to enhance their reasoning and assessment skills to get the most out of new technologies that will optimize their capability for risk selection and pricing. The role of underwriting shifts to one of prevention — identifying and reducing risks by partnering with customers and leveraging technologies.
By investing in talent development, insurers can ensure they are ready for whatever changes lie ahead and be confident their underwriters, armed with new technologies, are prepared for the future.
Next-generation underwriting will also include more proactive, preventative measures through closer customer partnerships and application of insurtech technologies. As such, best-in-class underwriting operations will require a culture that embraces change and collaboration.
The market leaders of the future will need to embrace collaboration, both internal (between underwriting, product development, data modelers and IT) and external, as separating capabilities will emanate from cloud solutions and insurtech providers.
Insurtech companies are already at the forefront of enabling greater innovation, creating new digital interaction models, lowering operating costs and improving customer experience. And these partners tend to have access to richer, more detailed data — and more complex modeling capabilities and AI.
Commercial underwriters will increasingly rely on insurtechs — and their data and AI — to better understand loss potential and risk assessment. Distributed data collection and connected IoT devices will contribute to more capable, informed, and automated underwriting.
In addition, technology systems will continue to evolve. Today’s modern core business systems, often cloud-native and offering application programming interfaces, allow insurers to be more adaptable and agile in incorporating external data and insurtech technologies. Such system capabilities allow insurers to more easily enhance their underwriting function and explore innovative products and services.
Further, these core systems are quickly evolving into “systems of influence” that will serve as a hub for connecting key partners — including distributors, insurtechs, and reinsurers. This evolution will underpin greater agility to innovate and integrate new technologies quickly, as they emerge.
Collectively, these enablers provide a foundation that empowers insurers to reinvent the underwriting role and prepare for the challenges and opportunities of tomorrow.
Sharon Petrell is vice president of customer experience at Guidewire, a leading provider of technology solutions to the P&C insurance industry. Sharon previously served as a consultant at Capgemini for more than a decade. She has overseen major transformations for insurers in their core commercial lines and advised companies around the world on the refinement and execution of their technology and business strategies.
Opinions expressed here are the author’s own.