The work of life company underwriters, at least, in companies that utilized the services of a Risk Assessment Company would change.

Underwriting, in general, would still be a required profession. But many would find themselves working for an RAC instead of a direct writer. However, they might find that to be a more interesting work environment.

However, the RAC could provide different levels of service to direct writers. As a full-service underwriter, it could replace the underwriting departments of insurance companies. Therefore, the direct writer would need only a high-level underwriting officer to manage and audit the underwriting services they bought. This would enable virtual companies.

Or, an RAC could function in an underwriting data collection and interpretation role. As such, the RAC would provide codified risk profile data to a direct writer (electronically) for interpretation and evaluation by that company’s underwriters much as this work is done today. This data could be quite detailed.

So, different insurance companies utilizing the same personal risk profile data could arrive at different underwriting classifications based on their view of the risk characteristics of applicants with that risk profile.

I would expect to see a much wider application of expert systems that could more easily and accurately evaluate the codified data than human underwriters. Using predefined rules established by the insurance carriers underwriters, these expert systems would provide instant underwriting decisions for most cases.

Clearly, unusual cases would probably still need individual, personal review by an underwriter. However, these are often the cases a direct writer passes by its reinsurers now to get the advantage of the reinsurance underwriters’ experience.

There is no question that the simple change in the timing of when “underwriting” or risk evaluation is done could have a traumatic–to some–effect on the industry. That is, probably, what could make this a hard sell.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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