5 Confessions of an Insurance Underwriter

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We recently sat down with a savvy insurance professional with an extensive background in underwriting to learn more about the challenges within this role.

Times are definitely changing for Underwriters and here is what we learned:


1. The process of underwriting has changed significantly (especially since the 2010s)

In the last decade, the underwriting process has become more methodical and data-driven with the onboarding of new technologies.

“In the old days, we were trying to predict the future. It was an educated guess, with support from the actuaries. Before technology, determining risk was a fill-in-the-blanks game. Gambling was a common analogy.”

2. The job responsibilities are expanding

The role of the Underwriter has become increasingly complex. More responsibilities are required to simply get the job done.

“In the new world, I’m part Business Developer responsible for revenue generation and my ‘hit-ratio.’ I’m also charged with profitability, accountable to loss ratios in my LOB. I’m feeling overworked, not to mention keeping up with all the tech trends. It’s nearly impossible.”

3. There will be a shortage of underwriters in <10 years

Underwriters will be retiring at record rates. With growing responsibilities and limited current recruitment, this issue will be a serious problem in a few short years.

“Meanwhile, we’ve all been reading about this looming 4-500,000 carrier staffing gap in the next 5-7 years due to retirement. With too few replacements in pipeline, we’re all asking, ‘What’s going to happen…’”

4. Adopting new tools is a double-edged sword

For tech-savvy Underwriters, they see tech as introducing efficiencies. Others see it a threat to their job or just a hassle with their job with little real ROI. The efficiency component of a new tool is crucial. Will it minimize a task, while increasing, or at least maintaining surety.

“When it comes to new Insurtech tools, I always ask ‘Will the tool help me reduce a process from 30 minutes to 5 minutes? Quite frankly, a lot of new tech that we’ve implemented in the last few years have failed due to unkept promises and/or bad training. Excitement doesn’t last. The solution has to deliver.”

“There’s also resistance from within. The adage in play is all too true, ‘It’s hard to teach an old dog new tricks.’

5. Technology can streamline processes

Technology is taking over a lot of the manual tasks that Underwriters used to do. In fact, many of the old tasks are no longer required. A new simplified underwriting process now bypasses many steps.

“Lemonade is now underwriting personal lines risk with only 4 questions. So, we’ve gone from an hour-long interview with an agent, to ‘give us 15 minutes and we’ll give you a 15% discount,’ to FOUR questions – literally an hour to 15 minutes to 2 minutes.”

“We are all unlearning the old way and adapting to new, automated underwriting systems. Data Analysis and discipline are the order of the day.”


Conclusion

Yes, it’s a challenging time for Underwriters. There is tremendous change occuring, which is always hard in and of itself. The issues of an aging workforce, retirements of key staff, staffing shortages, increased pressure to hit a new and growing set of metrics/responsibilities are topics that the industry itself has to address and while there is a tidal wave of new technologies available, finding the right technology is a critical solution.

With technology poised to replace a lot of the existing touchpoints, we anticipate significant changes and even further streamlining of the underwriting process. Given this trend, a secure, accurate, up to date condition of the asset remains an essential foundation for any automated underwriting solution.

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