Why insurance companies should consider automating underwriting processes

Cynthia Ezekwe

In recent years, the insurance industry has been going through a digital transformation, and at the centre of this transformation is the automation of underwriting. With the advent of artificial intelligence and machine learning, insurers are using advanced analytics and algorithms to automate the underwriting process, which was previously a very manual, labour-intensive process.

By automating the underwriting process, insurers are now able to assess risks and make decisions more quickly and accurately. The use of advanced analytics and algorithms allows for a deeper understanding of risk factors and risk profiles, leading to better decisions on the part of insurers.

The move towards automated underwriting is not only changing the insurance industry, but it is also redefining the way we think about risk and how we manage it. Automated underwriting systems use predictive analytics and machine learning algorithms to assess risk in real time, allowing for a more nuanced understanding of an individual’s or organisation’s risk profile. This can lead to more accurate pricing of insurance policies, as well as the identification of potential risks before they occur.

Dwelling on this, Earnix, a global provider of intelligent insurance and banking operations, outlined the six biggest benefits of using automated underwriting systems in the insurance industry.

The key benefits of an automated underwriting system, as highlighted by the insurance solutions platform include:

Integrated workflows 

Automated underwriting is that it allows for a more harmonised approach to pricing and rating. By analysing a large amount of data and using sophisticated algorithms, the system can help to ensure that pricing and rating are consistent and accurate. This can help to avoid costly mistakes and to maximise profitability. 

Easier management

By bringing all underwriting rules and logic into a single platform, automated underwriting systems can significantly reduce the workload on IT departments. Instead of having to manage and maintain multiple systems, IT staff can focus their efforts on other tasks. This can lead to a more streamlined and efficient IT infrastructure, with reduced costs and greater flexibility.

Advanced technology

The ability of artificial intelligence (AI) and machine learning (ML) algorithms to analyse large amounts of data and discover patterns that were previously hidden is a game-changer for the insurance industry. These technologies can help to improve the assessment of risk by identifying patterns in customer behaviour and market dynamics. This allows insurers to make more informed decisions about pricing, underwriting, and product development.

Greater visibility into potential outcomes

Automated underwriting systems streamline the decision-making process, allowing for rapid, well-informed conclusions with minimal effort. Technologies like Underwrite-It offer a real-time, comprehensive view of risk profiles, significantly enhancing the accuracy of risk prediction. This immediate access to detailed risk information enables underwriters to evaluate scenarios with unparalleled precision.

Increased revenue

Adopting a more analytical approach to underwriting can significantly improve decision-making processes, driving higher revenues and increased profitability. By leveraging detailed analytics, insurers gain insights into how different decisions influence key performance indicators (KPIs) and metrics, such as conversion rates, profitability margins, and customer retention.

Greater efficiency

Automating underwriting empowers  business users to independently make, test, and implement changes not only boosts efficiency but also introduces a level of agility and productivity previously unattainable. This transformative approach ensures businesses are well-equipped to capture new opportunities swiftly, securing a significant competitive advantage in the fast-paced market