Traditional underwriting is a time-consuming and demanding aspect of insurance.
Employing automation in underwriting gives room for efficiency and saves time rather than the manual method of operation.
Ready to explore the benefits of automation in your underwriting processes today? Read this piece about the role AI plays in automating underwriting in insurance.
What is Underwriting in Insurance?
Before we get to what automated underwriting is, you need to know what manual underwriting is.
Every insurance company is known to cover the risks on behalf of their clients. Through underwriting, insurers ascertain the financial risks associated with each client (either as an individual or organisation).
After underwriting is done, the insurer can then be sure of how much to charge their client for the risk to be covered.
Before the emergence of technology, underwriters operated manually by obtaining several documents and taking time to confirm whether they will insure a person, property or organisation before determining what the cost will be for covering the risks involved.
“Automation is cost-cutting by tightening the corners and not cutting them.”
– Haresh Sippy.
Automated Underwriting in Insurance
Automated underwriting is underwriting sponsored by technology. It is a faster, easier and more accurate way of carrying out underwriting procedures.
With the aid of software programs, underwriters can evaluate risks faster and save costs associated with manual underwriting.
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With the help of software programs like Robotic Process Automation (RPA) and Artificial Intelligence Machine Learning (ML), automated- claim-decisions and applicable interest rates are generated on time and without stress.
Here’s the report from an insurance firm that implemented automated underwriting.
We were constrained and losing business with every new application.
We were getting over 1,000 insurance applications a day which needed to be manually reviewed because of our technical limitations. By the time our team was able to review the applications, it was already too late in some instance-based.
Customers were frustrated with the response time and oftentimes went somewhere else.
We employed an automated underwriting platform and they worked with us to research and implement a new solution that automates 97% of all applications and made it easier for non-technical resources to author their own rules.
It handled all kinds of scenarios and made accurate decisions with surprising accuracy. It also allowed our underwriters to focus on the cases that needed deeper thought and research.
How do Automated Underwriting Systems work?
With an operating system that reduces paperwork, an automated underwriting system works with Machine Learning to tweak algorithms. Algorithms are common in underwriting because figures are been dealt with.
These systems gather information from different sources available to the underwriter and make futuristic-based decisions from the big data accumulated.
This is a much easier way to carry out underwriting rather than the traditional method which could take up to 60 days. You agree with me, this is a lot of time saved.
How Accurate is Automated Underwriting?
As an underwriter, you may think, why should a machine handle my job when I am available? Also, how accurate are these systems?
Here’s the thing, because automated underwriting is sponsored by AI, it reduces human bias drastically. Also, automation doesn’t take your place, it only helps you do your job faster.
It is important to note that an automated underwriting approval is only as accurate as the information input into the system, and will only be as reliable as the documentation provided to support the data processed. So to get the best results, you need to make sure the information you feed the system is accurate
Benefits of Automated Underwriting.
Beyond the major merits of saving time and ensuring easier workflow, automated underwriting in insurance has even more benefits:
- Higher productivity: The elimination of so much work gives room for more productivity as underwriters can now focus on more tasks and still work at their full potential.
- Easier decision making: Automated underwriting eliminates human errors or bias. With the power of machine learning, predictions are always more accurate.
- Smarter fraud detection scheme: Robotic software helps to track red flags and predict fraud.
- Saves time: Automated underwriting makes the first phase of the underwriting process much more efficient. It can provide instant outputs that can generally take up to 60 days to complete with manual processing.
- Better auditing: Employing automation in your underwriting process will automatically prepare a clear audit for you without stress.