Why investing in human ingenuity will drive innovation

Life and annuity insurers have adopted a host of new technologies in recent years to drive growth. Artificial intelligence, robotics process automation and data analytics – are only a few of the many new technologies that underwriters have at their disposal today.

Insurers are putting all the parts into place for underwriters to improve efficiency and drive new growth — but they aren’t quite there yet. Recent Accenture research found that underwriters feel positive about these new tools but are also concerned about their ability to use them.

To realize the full value of their tech investments, insurers must invest not only in technology but also in their workforces to ensure they can use these new technologies properly. They must then find the right balance of human ingenuity and machine collaboration that will best meet consumer and business needs alike.

Technological explosion
L&A carriers appear to be leading the way in adopting forward-looking technologies, with 75% of life underwriters rating the quality of their companies’ underwriting superior, with the same percentage awarding the same rating for their use of tools and technology to make underwriting more efficient.

What L&A carriers are doing with these technologies is remarkable. With the explosion of data now available to them, they are using AI, machine learning, and data analytics to mine that data to achieve a much better understanding of their clients, thereby generating much clearer risk profiles. They are adopting modern third-generation underwriting platforms that incorporate automation to reduce and streamline administrative tasks, like manual processes and data inputs. Those platforms also offer the added benefit of data veracity and insights at the point of need, so underwriters can get deeper insights when they need them.

Integration will be key
However, underwriters are saying that while the processes are improving, their workload is increasing. The technology is being put in place, but it’s not yet fully integrated. Despite automation, underwriters say they are spending about 40% of their time on non-core and administrative activities. While automation is helping, underwriters say they can’t overcome inefficient legacy systems and a lack of data integration across systems.

Equally important is training. About 40% of underwriters cited insufficient training as a top concern. This will only be compounded in the immediate future by the worsening talent shortage and the aging insurance workforce. The value of technology is limited if workers don’t know how to use it properly. Furthermore, the traditional apprenticeship model is becoming irrelevant as automation increasingly handles what would be entry-level underwriter cases

What is needed is a reimagination of the underwriting workforce. This reimagined workforce will be trained on and proficient in new underwriting platforms that include built-in data analytics and predictive models. It will know how to underwrite medical risk, but will also be technology-savvy and understand how the data drive decisions. It will understand why AI refers cases to the underwriter, and have a deep understanding of the data behind those referrals.

How to get there
Accenture’s research shows underwriters are eager to learn and embrace new technology, with 94% of respondents citing their top priorities to be improved training and skills development, along with improved tools for rating and processing risk.

Insurers will need to invest in a talent strategy that can deliver a future-ready workforce. They might invest in the existing workforce, borrow talent from external talent pools, automate tasks using bots and AI, and/or buy talent by hiring individuals or by acquiring organizational functions.

This will require investments of both time and capital. In the interim, insurers should consider establishing an ‘underwriting analyst’ position, partnered with data scientists to continually test, refine, and maintain new models while insurers upskill their workforce.

The goal
Insurers that will thrive in the future will find the right balance between human ingenuity and machine capabilities. They will know how to make them complement each other while making each other stronger. They will understand how AI and automation can enable human ingenuity to flourish, to the benefit of their companies and their customers.

L&A insurers are well down the path to achieving these goals, and underwriters are optimistic about their future. With a final effort to upgrade and integrate their systems and empower their workforces to work with them, insurers are poised to maximize human and technological potential.