Underwriters Retiring: Bane or Boon?

Sharon Payyappilly

Sharon Payyappilly

August 25, 2022

As the insurance industry adapts to swiftly changing market conditions, some roles are transforming as well. However, underwriting is one role that continues to be a key function for any insurance carrier. With their critical position of analyzing and assessing the risks in proposals, underwriters play a crucial part. Their expertise comes from long-term exposure to the domain, familiarity with the concepts of risk, and a good understanding of the market.

The challenge in the underwriting industry today is that experts, mainly from the Baby Boomer/Gen-X generations, are on the verge of retirement, and replacing them quickly is going to be difficult. Insurance firms will have to cross this hurdle sooner or later, and find an efficient solution to fill the gap.

The good news is that many technology-related innovations are making manual activities like data analysis and visualizations redundant. Driven by the need for efficiency and evolving customer expectations, most insurers are moving steadily toward greater digitization. With machine learning, virtual reality, and Internet of Things (IoT) accurately underwriting policies using real-time data, automating the underwriting function is fast becoming a norm. Further, 50% of insurance CEOs in the P&C insurance industry say, the pandemic has sharply accelerated progress in creating a seamless digital customer experience, putting them years in advance of where they had expected to be. In such a scenario, it is becoming increasingly obvious that they do not plan to limit the digitization plans to just customer facing facets of their organizations. Underwriting is surely undergoing a digital transformation.

Though technology can potentially transform many of the underwriting processes, the human touch is critical in using judgment in analyzing data and making informed decisions. Modern day underwriters will need to upgrade their skills to thrive in this dynamic, technology-driven world. They will have to be agile, using their experience and judgment to manage portfolios, adapt to changing market conditions, and maintain broker and client relationships.

Insurers will need to integrate human talent and technology. Creating or buying expertise could be difficult, as quality is always a challenge. The optimum choice is to look at third party service providers who combine the latest technology with market-best expertise and maintain a workforce of seasoned underwriting experts. Insurance firms can acquire underwriting experience on demand while ensuring excellence in quality. Industry-level certifications and credentials, diversified/focused experience, exposure to technology, and experience benchmarks. are some of the criteria that they can look for.

Underwriting service providers also provide support activities like catastrophe modeling, scenario analysis, rating, binder support, pricing, and document processing as value added services, bringing down the overall cost of operations and cycle times. Experts-in-the-Loop based processes, structured efficiency creation objectives, localized as well as systemic improvements, and industry best practice assimilations are the forte of service provider organizations like RRD.

With 82% of Fortune 500 companies as clients, RRD has 15+ years of industry experience and a 1200+ insurance team. RRD’s specialized Insurance Center of Excellence offers domain expertise, customized business solutions, client-first approach, and thought leadership. The end-to-end solutions include subject matter experts working with clients to better understand their business, and building solutions capable of consistently supporting complex processes.

Insurance firms faced with workforce challenges are today going for sudden transformations by leveraging technology, sometimes leading to unhappy customers. According to the GSAM survey, around half of survey respondents are keen to invest in InsurTech. However, ushering in a sequential and systematic change by collaborating with a third-party service provider is a better solution. An ideal partner would be someone who can bring in a progressive change after assimilating the conventional and documented aspects of the business.

The decisions taken by the CXOs, and more specifically by the Chief Underwriting Officers (CUO) today, regarding underwriting, are significant and will determine an organization’s success. A shift in organizational mindset and culture, as well as identification of the right partner can potentially lead to true transformation.

Data Source: KPMG_2021 CIO Survey