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How is automation revolutionizing the insurance underwriting?


Since the breakout of the Covid-19 pandemic, everyone has been on high alert about their health and related medical conditions. In addition to preventive health measures and treatments, getting comprehensive health and life insurance policies has become a top priority. However, this increased curiosity and eagerness has put a strain on the insurance industry sector in our country.

What Is Underwriting In Insurance?

After applying for an insurance policy, a lengthy and stringent evaluation process known as underwriting gets carried out to determine your eligibility. Under this process, the underwriter employed by the insurance company will review the risks associated with accepting your application after making a detailed assessment of your financial assets. Your insurance acceptance or rejection will depend on the appraisal performed by the insurance underwriter.

But since this is a strict time-consuming process, most insurance companies are leaning towards underwriting automation to save time and boost the efficiency accuracy of the process. In this article, we will be talking about how underwriting automation has revolutionized the insurance industry. Keep on reading to learn the benefits of automating the insurance underwriting process.

Why Is There A Growing Need For Automation In Underwriting?

For risk assessment, premium pricing, and insurance application judgments, insurance companies have traditionally depended on underwriting experts and risk managers. These processes, however, were paper-based until the 2000s, when insurers began using a variety of digital tools to complement manual underwriting processes. Manual underwriting models, on the other hand, come at a high cost to the company: underwriting fees can vary from $50 to $130 per hour, doubling on a headcount basis in some lines of business, and the underwriting process can take days to weeks. Furthermore, scaling up with manual underwriting entails significant fixed expenses as well as higher operating overheads.

These issues were addressed by automated insurance underwriting. To automate the underwriting process, it uses an integrated IT infrastructure, a comprehensive customer (and/or ecosystem) data footprint, and the company's underwriting criteria. In a nutshell, automated underwriting uses artificial intelligence (AI), robotic process automation (RPA), natural language processing (NLP), optical character recognition (OCR), and APIs to access real-time data from third parties in order to map the risk profile associated with an asset or a scenario to your company's business rules.

Before we share how these technology processes can be a life-saver for insurance companies, let's understand why we need automation in insurance underwriting. Here are the top five needs that are addressable by availing of underwriting automation:

  • High human error rates can dampen the accuracy and precision of your data analytics and make your data less reliable for decision-making.
  • Low compliance with current and latest industry practices and policies requires expert training and inspection, resulting in heavy cash outflows.
  • Lengthy evaluation processes involve several repetitive tasks and processes requiring extended periods, ultimately slowing down the overall turnaround time.
  • The lack of high expertise combined with an ever-increasing workload acts as a barrier to the productivity of insurance underwriters.
  • The current manual underwriting evaluation system has low reliability due to its lack of capability to accurately predict the risk level.
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How Is Automation In Underwriting Helping The Insurance Sector?

Now that we have highlighted some of the top obstacles for insurance underwriters, it's time to share how adopting an RPA within your insurance company can solve these problems. Here are the notable benefits that automation can offer to the insurance industry.

  • Companies can eliminate human error from their underwriting processes and offer accurate and precise data analytics. This step will be a vital tool in decision-making that offers improved risk assessment.
  • By adopting underwriting automation, companies can reduce their turnaround time significantly. This will eliminate mundane and repetitive tasks and contribute towards faster processing and increased customer satisfaction.
  • Using automation in your underwriting process will enable you to comply with all the relevant rules, policies, and other regulations with minimal effort. Make revisions to your system and update them to keep up with the latest practices.
  • With increased savings in time and other valuable resources, your insurance company can now focus on acquiring more clients and improving your customer relationships. Get new clients without compromising on the quality of work.
  • Automation of insurance underwriting allows you to speed up your insurance renewals by taking minimal measures. Robotic process automation in insurance companies can reduce processing time while creating opportunities to collect feedback.

Generally, automated underwriting systems bring millions of dollars in cost benefits, reduce turnaround time by over 95%, and can infer thousands of unique rules when implemented in large-scale contexts.

Implementation Of Underwriting Automation In The Insurance Sector:

We hope you have realized how adopting robotic process management in your company can help you boost your operations. Now is the time to understand how you can implement the automation process for your insurance company to offer quick and effective processing.

  • The first step towards implementing an automation process is identifying repetitive and recurring tasks and designing a budget-friendly model that will help you save time.
  • Following that, your next priority should be to safeguard your automation process in the early stages itself. Focus on designing strategic securities to protect your invaluable data.
  • Next, review your newly implemented underwriting automation process to identify any flaws in the system. Collaborate with your strategic partners to design an effective automation system.
  • The next step is to hasten your automation by implementing it for task-end to end-to-end operations. It also includes integration with other intelligent solutions such as AI, ML, IoT, etc.
  • Implementation of your insurance underwriting automation would be incomplete without employee training. Offer training to employees from all departments enabling them to use it effectively.
  • Set long-term and short-term goals and constantly evaluate the performance of your automation system. Focus on clear and definite objectives to help you derive maximum benefits from the automation process.
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Conclusion:

According to McKinsey, the best-automated underwriting systems combine the best of analytics and human judgment to maximize the value for an insurer. As a result, assessing a system based on the degree of intervention it requires in underwriting alone is not the right approach to assessing such a system's effectiveness. Our team of experts can help you leverage and automate the underwriting process. For a sustainable automation process for your insurance underwriting, reach out to our professional team today!


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