In case you missed it, we are now living in a hyper-digitalised society where people of all generations are embracing technology, and where customers demand hyper-personalised and experience-led services from the businesses they engage with, and are willing to change their shopping behaviour to get it (World Insurance Report, 2020). This paradigm shift is both a crisis and an opportunity for traditional insurance companies who have typically been regarded as one of the slowest adopters for digital services compared to other industries (The Digital Insurer). For many years, commentators on the life insurance industry have foretold of new tech-savvy entrants who will rise to dominate the market with smooth, digitally supported propositions. Whilst this scenario is most certainly a matter of when, not if, it is not too late for traditional insurers to lean deeper into their own use of technology and stay ahead of the competition.

While many insurers have benefited from underwriting engine (UE) technologies to augment their underwriting journeys and drive straight-through processing (STP), it is fair to say that progression to fully automated underwriting journeys in more recent years have stalled within the retail life insurance market, with the end-to-end customer processes remaining generally arduous and manual in nature. Simultaneously, it is widely recognised that the need to progress digital transformation initiatives within the insurance sector promptly is paramount for life insurers to remain competitive and relevant in a rapidly digitising world post the COVID-19 pandemic. According to McKinsey, the traction of many companies’ accelerated or automated underwriting programs has been limited, largely because insurers have taken a cautious, incremental approach to scaling automated decision making.

In considering why the market may be struggling to take a more revolutionary step, I would question whether insurers are appropriately aligning their thinking with the goal of delivering a fully digital and automated experience that is supported by a professional underwriting unit, or whether they instead still expect the underwriter themselves to be central to the underwriting process. The very first UEs were a revolution, not only in supporting the growth of data analytics (made possible through simply digitising the capture of the application data) but allowing insurers to accept basic cleanskin applications electronically without requiring effort from their underwriting team.

Launch forward many years to present-day systems, and not much has changed. Underwriting technical teams have expanded the ability to accept more and more conditions at point-of-sale, but the limits of this approach are rapidly approaching, if not already reached. Critically for our current thinking of what is possible, many underwriting teams still consider that those cases which are not accepted straight-through officially becomes the “underwriters” case, and no longer a case fit for handling by a UE. Not only has this thinking led insurers to woefully under-utilise their automation potential on referred cases, but the underwriting systems and processes which are in place to support these referred customers are bereft of structured data capture and process automation, to the point that the manual underwriting process on referred cases can itself ironically be akin to a black box solution.

Life insurers would be well advised to reimagine the potential of their UE to maintain ownership of these referred cases to keep them on an automated journey, utilising the underwriting team to support the UE instead of the reverse. The transitioning role of the underwriter should be a key focus for insurers looking to successfully execute digital transformation initiatives, both for the benefit of the underwriting automation solution and the underwriter themselves. As noted by Accenture, underwriters need to work alongside AI to “teach” it to apply rules which involves the convergence of new and existing data sources, to support AI in unlocking value from human underwriters. At the same time, Deloitte notes that those underwriters who embrace and adapt to transformation demands and enhance their core skills and overall expertise, have an opportunity to widen their career paths and become champions of the technologies that will likely make their jobs easier yet more challenging and satisfying.

By maintaining an automated end-to-end case journey as the core goal of the UE solution, which is well supported by structured data sources and the right balance of AI/ML models and UE level decisioning, insurers will be able expand their STP capabilities far beyond that achievable by present-day solutions. At the same time, maintaining a clear and unified digital view of its customers will enable insurers to achieve even greater levels of insight and process efficiency, deliver more affordable insurance solutions, reach more customers, and also the ability to provide personalised journeys to save both the customers’ and the insurers’ time.