FREMONT, CA: The insurance industry is increasingly incorporating technology-driven solutions to address many of its challenges. Underwriting solution is one such aspect of the insurance sector that is benefitting highly from innovations such as artificial intelligence (AI), improved data analytics solutions, and others. When it comes to underwriting, insurance firms are eyeing solutions that can serve the particular interests of individual customers. Personalization of insurance underwriting has the potential of revolutionizing the industry.
MCE Insurance is set to move to full AI underwriting following the implementation of the ICE Policy software system. According to the broker, ICE Policy, part of the Acturis Group, gives it the ability to develop AI and auto-machine learning within the business. MCE said that the move marks the final step towards creating a fully automated model providing dynamic, precision pricing by bringing together all quote, policy and claims data. This data equates to 20m records each month.
Naked Insurance, a Hollard-backed start-up, has become SA's first operative insurer to relinquish underwriting profits through a business model that co-founder Alex Thomson says solves the "conflict of interest" inherent in insurance firms. Naked Insurance is one of a string of "insurtechs", the name given to insurance-related financial technology (fintech) companies hoping to disrupt SA's insurance industry -- in many cases funded by their traditional counterparts. Speaking on Tuesday at the launch of Naked Insurance, underwritten by Hollard, Thomson, an actuary and former partner in EY's insurance advisory business. said insurance companies were incentivised to minimise the cost of claims to maximise profit. This compromised claims handling and the fairness of premiums. Naked Insurance would instead collect a fixed 20% of premium income to cover its costs, while money left over after paying claims, known as underwriting profit, would be donated to charity.
The digitization of business is in high gear. Although some sectors have embraced this change, others, including the insurance industry, have been slower to implement advances. While we've previously addressed insurance coverage for artificial intelligence (AI) risks, the risk-averse culture of the insurance industry has been particularly resistant to change in its own business. However, as the buzz and perceived benefit around digitization, advanced analytics, machine learning and, specifically, AI continues to grow, many insurers are starting to take notice. Willis Tower Watson found that $728 million was invested into "insure tech" companies in the first quarter of 2018 across 66 transactions.
Insurance industry that operated with low profit margins, is facing increased competition both in terms of price and time to serve. This approach resonates with customers as 85% of customers want to buy insurance policies more quickly. How can insurers keep up? To keep up, Insurers are renewing their underwriting departments to price risk better and in less time. We explain why insurers must renew their underwriting approach and introduce four key technologies that enable more effective underwriting.