![]() They also need to remain agile and flexible, and use their experience and judgment to manage portfolios, adapt to changing market conditions, maintain broker and client relationships, and keep coverage and pricing realistic in a competitive market. ![]() Underwriters need to be able to thrive in both realms-as data pioneers and technology trailblazers. Indeed, there are still gaps between rules-based underwriting and what’s actually happening in the market-shifts in capacity, emergence of new risks, and a subsequent need for coverage and price adjustments-that only a human underwriter can manage. Underwriting will always be partly judgment-driven otherwise, the role could be fully automated. Second, underwriters are being asked to bring more science to the art of underwriting. Underwriters will likely need to upgrade their tools and skill sets to thrive in this dynamic, forward-thinking world. And with rapid digitization, the availability of alternative and predictive data is increasing, which makes risk selection increasingly competitive and facilitates more rapid adjustments to underwriting strategies. Meanwhile, the customers’ world is changing, becoming more digital and interconnected via global supply chains. Take cyber insurance, for example, where threat actors are constantly evolving their tools and techniques, making rearview-mirror underwriting less than reliable. In the future, historical data alone may not be enough to underwrite an evolving set of risks, particularly in commercial lines. First, underwriters are being challenged to move from hindsight, where underwriting decisions are evaluated after the fact, to foresight, where portfolios are actively monitored, to understand the impacts of risks added to their books of business in real time. Three trends stood out that should fast-track the case for underwriting modernization. To understand insurers’ long-term plans and to envision the future of underwriting and those working in the function, we interviewed the chief underwriting officers (CUOs) or equivalent business leaders of several large life and property-casualty (P&C) insurers. Underwriting has been a key focus area: Most insurers have actively been upgrading their underwriting capabilities with more advanced technology and expanded data sources. They may face adverse risk selection, could drop off preferred lists of distribution partners, and may have a more difficult time recruiting and retaining skilled professionals.ĭriven by the need for efficiency and evolving customer expectations, most insurers have been moving steadily toward greater digitization. Insurers that continue relying on traditional ways of underwriting could start a negative spiral that would be difficult to reverse.These areas are interconnected and interdependent, which means success in the transformation journey will likely depend on making continuous advancement across each of the four areas. Insurers should consider upgrading four major areas in tandem-strategy and governance, data and analytics, technology, and culture and talent.In doing so, they can evolve into the following new roles: technology trailblazer, data pioneer, deal-maker, portfolio optimizer, and risk detective. Rather than being displaced by automation, exponential underwriters can multiply their value by gaining new skills and transitioning to a set of enhanced responsibilities.They can do this by automating routine tasks and augmenting teams with emerging technologies and alternative data sources to empower underwriting professionals to become “exponential”-more valuable than ever. To remain competitive, insurers should accelerate underwriting transformation.
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