Like other white collars professions being transformed by technology, the underwriter’s job in the future will be much more information-intensive while remaining an essential corporate function.

Tasks that can be automated will disappear. The ability to interpret big data will become paramount as tomorrow’s underwriters employ high-tech tools to manage policy risks more effectively and efficiently.

This was the vision advanced by two panelists, Elizabeth Riczko and Kathleen Zortman, at a break-out session during National Underwriter’s 2016 “Annual Insurance Executive Conference” happening today and Thursday (December 7-8) in New York City. This pair of insurer executives outlined how technology is disrupting their industry and reshaping the underwriter’s role in a quickly-evolving business environment.

Related: 3 reasons Lemonade’s CEO wants to disrupt the insurance industry

Digital automation is already upending the field. When asked which IT solutions they’re using, nearly half (48 percent) of conference attendees polled flagged artificial intelligence, or AI. This was followed by:

      • Social media (24 percent)
      • Robotics (14 percent); and
      • The Internet of things (IoT) 10 percent.

These and other nascent technologies can help further — not displace — the underwriter’s function, said Zortman, president of property and casualty for QBE North America. Rather, new IT tools will automate routine functions such as policy quotes and applicant screenings. This will enable underwriters to focus on tasks that require interpersonal or high-level analytical skills, such as interfacing with agents and advisors, or assessing risk associated with large policy face amounts.

Riczko is the group underwriting and product leader at Westfield Group. She added that many new technologies are still in development and not quite ready for prime time, nor should they be adopted for their own sake.

Innovation, she said, must first and foremost serve corporate business objectives and problems that need solving.

Among them: easing and speeding the underwriting process to meet rising consumer expectations. Increasingly, the panelists noted, customers want an Amazon-like experience when going online. That means automating and digitizing functions that shouldn’t require human intervention on the carrier’s end (e.g., writing down credit card numbers at the point-of-sale or gathering information about proposed insureds needed to facilitate policy applications).

Another challenge: integrating new IT solutions with legacy systems.

Another challenge to innovation in insurance: integrating new IT solutions with legacy systems. (Photo: iStock)

Many carriers also rely on back-office servers to handle policy administration, sales, marketing and other functions, and this infrastructure is badly in need of updating. Migrating or retrofitting these systems to meet new business demands may produce bottlenecks due to coding or interoperability challenges. These hurdles may, the panelists noted, necessitate a “two-speed” approach to IT upgrades:

        1. Innovate at a fast pace in areas unencumbered by the existing infrastructure; and
        2. Evolve older systems at a slower speed where extra due diligence and testing are key to ensuring that adoption of new IT capabilities don’t disrupt mission-critical business operations.

To thrive in the wake of this technology-fueled industry disruption, insurers need to adopt “success factors” akin to those that characterize Silicon Valley’s startup culture, Zortman said. Insurers will need a “survival mindset,” and the drive to take risks on new solutions or business processes when agility, rather than caution, is a priority.

To that end, Zortman said, insurers must “unfetter their employees” by allowing them to experiment with new ideas, products or services without fear of failure. They also must “embrace” mistakes, bearing in mind that in a startup culture, mistakes are an inevitable part of developing successful strategy.

Another key issue: As digital automation transforms business processes, will underwriters remain generalists or need to specialize to fulfill more complex or technical functions? On this question, the panelists were split.

Zortman subscribed to the former philosophy, noting that underwriters will need to remain “multifaceted” and “multidimensional.” Software alone, she insisted, won’t be able to handle a myriad of underwriting tasks that require the “human element.”

Riczko disagreed. Many underwriters will continue to perform traditional functions in the field, but others will evolve into “decision scientists,” or professionals who rely on big data, analytics and other technical tools and skills.

Increasingly, the panelists observed, these underwriters of the future will be millennials, or individuals born roughly between 1982 and 2004 who are entering the labor force in growing numbers. These “digital natives” — people brought up in the Internet Age who are comfortable with technology but also less trusting than older generations of company claims not supported by data — will be needed in the innovation labs, startups and early-stage companies, which insurers are investing in to help transform underwriting and other business operations.

The carriers’ venture capital initiatives come with their own set of obstacles. High on the list: How to manage a growing portfolio of alliances with companies in the insurtech and fintech spaces.

In some cases, Riczko said, acquisitions of startups in Silicon Valley or and other technology centers across the globe may make sense where business objectives and corporate cultures are sufficiently well-aligned. In other instances, less formal partnerships, wherein tech companies are free to pursue initiatives on their own, may be the prudent approach.

Zortman concurred.

“People overseeing technology initiatives need to have a high degree of autonomy to innovate,” she said. She added that insurers must be prepared to partner with direct competitors on tech initiatives when their combined financial muscle and business talent is advantageous.

See also:

The advisor’s role in financial underwriting

Marijuana from an underwriting perspective

Life insurers use technology, data to streamline underwriting

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