Automation allows companies to eliminate repetitive tasks and free up time to focus on more strategic and impactful work. For this reason, insurers are increasingly moving away from the manual way of working and introducing automated underwriting. This shift enables insurance companies to control risk and improve data visibility for better decision-making, which makes it possible to keep up with the competitive times. This article explores the benefits of automated underwriting in insurance and why investing in it is a strategic move for businesses.
7 Benefits of Automated Underwriting in Insurance
Speed
The advanced algorithms available from automated underwriting systems enable real-time analysis of massive volumes of data, increasing the speed at which insurers can make informed decisions. Companies that can offer quotes within a good time tend to win more business than their counterparts. For example, using conventional underwriting can be slow, leading to a 55% average close rate in property and casualty insurance. Due to low speed, insurers tend to miss 45% of potential buyers, resulting in loss of opportunities and revenue.
However, by reducing customer waiting times, insurers are able to retain customers for longer periods. While more traditional systems are slower, automated approaches help insurers compete with agile and digitally-forward rivals within the market. Speed and offering convenience are key to the underwriting process because they facilitate better customer experiences and higher service outcomes. Integrating automation into workflow empowers underwriters to make data-supported decisions about the risk levels associated with potential policyholders.
Efficiency
By using the automated underwriting process, insurers are able to improve data collection and analysis that are necessary to underwrite various policies. Improving this area of insurance makes it possible to increase cost efficiency and save time, which benefits customer experiences and allows workers to offer well-organized services.
Scalability
Unlike automated underwriting, manual processes are difficult to scale in an effort to meet the growing demand of applicants within an insurance agency. The traditional route can be costly and inefficient for companies that continuously expand. Yet, automated solutions are flexible and can easily handle high demand and workloads without the need for additional resources. The scalability of automated systems saves businesses time and money, while increasing sales and consistency.
Fast Turnaround Times
Since automated solutions improve scalability and speed, insurers demonstrate quicker turnaround times. Automation reduces the time companies spend sourcing through applications, allowing potential policyholders to receive communication and decisions about their policies faster. The ability insurers have to attend to customer needs in a timely manner is crucial for customer satisfaction, and it strengthens a company’s reputation over time.
Cost Savings
By using automated systems, insurance companies can increase underwriting productivity and reduce operational expenses. Cost savings can translate into more affordable premiums and competitive rates for policyholders, which supports overall service efficiency. The ability of insurtechs to issue policies and process claims in minutes rather than days enables insurers to meet demand expectations quickly, leading to revenue growth.
Regulatory Compliance
The insurance industry is heavily regulated, but remaining compliant can be challenging for insurers. By introducing automation, underwriters can process each application according to the relevant regulatory standards. These systems can update information quickly and in accordance with the latest laws, which minimizes the risk of noncompliance within firms.
Many regions have regulatory policies that govern compliance and transparency across regions, and automation enables insurers to get real-time updates to maintain compliance. For example, the General Data Protection Regulation is a law that commands data protection within the European Union and affiliated areas. Similarly, the United States applies fair lending laws that must be integrated into systems. Using automated algorithms helps companies address regulatory concerns quicker, prevent bias, and ensure fair policy decisions. Insurance that upholds regulations also prevents complaints, enhances transparency, and improves trust among stakeholders.
Risk Management
Alongside compliance regulation, automated systems help underwriters monitor and assess risk in real time. Ongoing risk management equips companies with the data they need to adjust their strategies promptly in response to potential issues. Taking a proactive approach to mitigating risk supports operational efficiency and minimizes the chances of financial losses.
Automation as a Strategic Business Move
In this competitive insurance market, early automation adopters gain an advantage over contenders. They get a better vantage point and position themselves to provide faster, more accurate services that attract and keep customers. Insurers should view automation as a strategic business move because it demonstrates a willingness to innovate, which is crucial for success in today’s increasingly digital environment.
Executives in multiple industries prioritize innovation and acknowledge it as an integral part of the underwriting value chain. According to CIO survey results, 73% of large carriers integrate the cloud into company solutions while 64% use insurance technologies to support underwriting processes. By using innovative solutions, these insurers drive profitability and reduce technical debt within their respective organizations.
Additionally, innovative systems enable a more controlled end-to-end experience that allows customers to apply for policies and receive quotes quickly. To this point, insurers are able to streamline data and minimize silos for more effective policy administration systems. Integrating automation into legacy systems increases a company’s ability to combine data sources and connect workflows, which reduces decision-making time and improves underwriting processes.
Automated Underwriting Use Cases
Reinsurance Group of America
As a global industry competitor, Reinsurance Group of America specializes in financial solutions and life and health insurance processes. The reinsurers within this company use predictive analytics in underwriting, which improves accuracy, speed, and risk evaluation. Reinsurance Group of America uses machine learning tools such as natural language processing and optical character recognition to organize and read through medical reports and other important information, minimizing error and misinterpretation. These tools help with summarizing data for underwriters to save time and offer data-driven solutions.
Swiss Re Group
Another globally recognized reinsurer, Swiss Re, uses automation systems to speed up underwriting processes. AI and data analytics help the company minimize the mistakes brought on by manual labor. With customer permissions, this company uses intelligent approaches to review reports and data from client devices such as phones and watches to save time and improve risk management practices.
Conclusion
As insurers adopt smart solutions, they are better qualified to collect relevant data and gain leads for quality decision-making. With each innovative strategy, insurance companies receive an edge over global rivals that still use manual underwriting processes. Looking ahead, automation is key to getting the best results and improving policy management within the insurance industry.
