The Underwriter of the Future: How Technology is Transforming the Role
by Rachita Nahata
Underwriting, like most roles in the insurance industry, is evolving. Changing customer needs, new technologies and approaches, and better sources of data are all leading to improved efficiency and more cost-effective outcomes for insurance organizations. While some have argued that these new tech-enabled approaches will make the underwriter of the future redundant or obsolete, I would argue that they will, instead, actually diversify the role.
The Impact of Technology
Technology is transforming underwriting in multiple ways, including:
- Faster and more accurate data capture through intelligent tools, enabling underwriters to not only save time and effort but also make third-party data more accessible and accepted.
- Intelligent automation, powered by machine learning and AI, is enhancing risk evaluation and helping to resolve an increasing percentage of cases.
- Underwriting platforms are moving from legacy, desktop platforms to cloud-based solutions that simplify the underwriter’s workflow and enable them to work from anywhere they have access to the internet.
Each of these trends is redefining the traditional role of the underwriter. So, what skills will the next generation of underwriters require to succeed? Let’s look at three that will be critical.
- Technical expertise
Intelligent technology-driven solutions require ongoing testing and updating, and underwriters are already working with engineers and developers to fine-tune them. In the not-so-distant future, underwriters will have to take a larger role in that process, which will require a degree of technical expertise in the underwriting role that is not presently needed. The adoption of low-code/no-code platforms will enable underwriters to be technology generalists instead of specific platform specialists, however.
The nature of risk is evolving, requiring the next generation of underwriting professionals to constantly adjust their approaches and views to effectively understand changing exposures. From the Covid-19 virus and its variants to the changing risks from natural catastrophes due to global climate change, the unpredictability of risk factors illuminates the need for new approaches to risk management. Insurers realize that they need to understand these shifting risks in real-time. The underwriter of the future will play a key role in developing similarly adept technologies to analyze and keep a track of evolving risks in the business ecosystem.
- Critical thinking skills
Intelligent automation, driven by AI, can understand risk factors and underwrite basic exposures, freeing underwriters to focus on understanding and resolving complex cases. This will make the underwriting role more critical than ever, and more interesting. It will require young underwriters to build a strong foundation of knowledge and expertise quickly and could lead the role to be more appealing to young professionals as new underwriters will spend less time consolidating and entering data and more time developing critical thinking skills and understanding risk nuances.
As insurers work to digitally transform their operations there is great potential for the underwriting role to transform alongside them. New technologies and business processes have the potential to enable underwriters to leverage their knowledge and experience, causing the role to be even more important for insurance organizations as they redefine processes and workflows.
Rachita Nahata is VP, underwriting for Xceedance. She can be reached by email at [email protected]