Harnessing Technology: The Impact of Automated Underwriting on the Insurance Industry

Table of Contents

• Introduction to Automated Underwriting

• How Does Automated Underwriting Work?

• The Top Benefits of Automating Insurance Underwriting

• Data Security and Privacy Concerns

• Integrating Automated Underwriting with Other Technologies

• The Economic Impact of Automated Underwriting

• Customer Adaptation and Market Response

• The Future of Insurance Underwriting

Key Takeaways

• Understanding what automated underwriting systems are and their significance in the insurance industry.

• Exploring the various benefits automated underwriting brings, including increased efficiency and accuracy.

• Discuss the potential data security concerns and how they are being addressed.

• Highlighting the economic impact of computerized systems and their integration with other technologies.

Introduction to Automated Underwriting

The insurance sector is witnessing a significant transformation propelled by the integration of digital advancements. Central to this transformation is the adoption of an automated underwriting system. This streamlined approach employs sophisticated algorithms to swiftly and accurately assess risks when determining eligibility for insurance policies. With roots stretching back to manual processes, the rise of automated underwriting heralds a revolutionary modernization, setting the stage for unprecedented accuracy and efficiency in risk management strategies.

Initially, automated underwriting found its way into industries with a penchant for meticulous data scrutiny, notably finance and healthcare. Over time, the benefits became irresistible to the insurance sector, a field predicated on the delicate balance of risk and reward. The confluence of computational power and the burgeoning digital data cosmos offered an allure that traditional methods couldn't match. Thus, the industry has gradually embraced these automated systems, reshaping how insurers do business and interact with customers.

How Does Automated Underwriting Work?

Automated underwriting system operate by synthesizing large client information databases and running this through complex algorithms. These algorithms are engineered to identify risk factors and predictive indicators swiftly. Automation renders the underwriter's toolkit digital, allowing for rapidly processing information that would otherwise require extensive human involvement.

The information is subjected to computational analyses upon submitting an insurance application. Variables like medical history or driving records are juxtaposed against actuarial data, pulling the minute into the meaningful. The process is meticulous yet far swifter than any human could hope to match. The underwriting procedure thus becomes a precision task where speed and accuracy are no longer competing interests but complementary facets of a coherent whole.

The Top Benefits of Automating Insurance Underwriting

Automating the underwriting process comes with a host of compelling advantages. Perhaps the most heralded of these is the marked enhancement of risk assessment accuracy. Employing robust data analysis tools, automated systems detect connections and patterns a human underwriter may not catch, providing deeper insight into each applicant's risk profile.

These systems also confer substantial efficiency gains, trimming the time from application to conclusion. They open avenues for the expeditious delivery of services, which has become a linchpin for customer satisfaction in our age of immediacy. The seamless amalgamation of speed, precision, and customer service lends the insurance industry a significant competitive edge, bolstering its ability to attract and retain clients in a market awakened to the prospects of time as a currency.

Data Security and Privacy Concerns

Strides in technology, undoubtedly beneficial, are kept from waltzing forward unshackled by concerns, with those around data security and privacy being chief among them. As companies tout data collection and processing expansiveness, questions arise about the safety and sanctity of personal information within automated systems. Insurers are, therefore, thrust into the vanguard of cybersecurity, establishing robust defenses around the vaults of sensitive customer data.

The stringent securement of databases and commitment to vigilant privacy practices have become not just prudent but mandatory. Regulations grow more rigorous, reflecting societies' evolving sensitivities to handling their data. Insurers deploying automated processes must tread carefully, ensuring that the sophistication of their systems extends to the protection they afford the individuals whose information powers these same systems.

Integrating Automated Underwriting with Other Technologies

The development of automated underwriting is an ongoing process involving integrating several technologies, such as artificial intelligence, machine learning, and blockchain. These technologies enhance the capabilities of automated underwriting systems, making them more efficient and effective. For instance, machine-learning algorithms can learn from vast data and improve outcomes for insurers and insureds. 

Moreover, these technologies offer elastic scalability, meaning they can adapt to insurers' changing needs and complexities. These systems are not static but evolving ecosystems that provide an infrastructure that evolves dynamically with the insureds it serves.

The Economic Impact of Automated Underwriting

Automated underwriting systems are impacting the economy and operations of the insurance industry. These systems are expected to bring cost efficiencies, not just in time saved but also in claims resolved by precise risk assessment. Insurers will see a decline in unwieldy overheads, and policyholders may benefit from better-priced premiums.

Moreover, automated systems will modify the entire risk pool dynamics, potentially ushering in a future where insurance offerings are more customized and better suited to individual needs. These potential fiscal implications will transform the industry into a more modernized and data-driven epoch that is buoyant, brisk, and more aligned with the needs of the present times.

Customer Adaptation and Market Response

As insurance companies introduce automated underwriting systems, their effectiveness is measured by the market response. So far, customers have responded positively, indicating that what was once considered advanced technology is now expected. Customers now expect fast service, personalized policies, and seamless interactions, all thanks to digital innovation and customer expectations. 

Industry trends show that people are slowly accepting and embracing automated solutions. They are becoming familiar with the advantages and disadvantages of a digital-first environment, and their demands are changing accordingly. Insurance companies understand that they need to be adaptable to keep up with technology and the changing demands of customers.

The Future of Insurance Underwriting

The future of automated underwriting systems is promising as technological advancements pave the way for a more refined insurance underwriting process. It could lead to integrating other sectors, such as healthcare and property management, where insights and interfaces are shared to create a cohesive and interconnected system.

The envisioned future also leads to a shift in the job landscape as computational tasks become automated, allowing humans to focus on developing new strategies and engaging with customers. However, investing in technology and the skills and perspectives required to navigate it is vital to prepare for this adaptive and intertwined future.

Top 10 Technology Trends for Business in 2020

This year a number of emerging trends in technology have had an impact on how people do business. Cloud service and data management providers have been running the show, due to the increased threat to cybersecurity. Advances in production have been made with the introduction of artificial intelligence, and many fields have benefited from automated transactions. Let’s take a look at what different companies have been investing in, and what is currently in store for the future of business. Here are ten technology trends that have been developing in business so far in 2020. 

Alternative Payment Methods

The shift has been mainly from credit or debit card transactions to other forms of online payments. This improves transaction speed, security, and efficiency. Innovations in technology allow payments and money transfers to be made remotely. Apps such as Square and Paypal have been making business owners’ lives easier for a while now.  

Now that businesses tend to have a variety of accounts set up, Open Banking is another example of financial innovation. Advances in artificial intelligence and security mean that business owners can receive an overview of accounts from different banks at the same time. Here are the main types of alternative payment methods trending in 2020. 

Account-Account Transactions

Account-account transactions are becoming more common. Tide is an example of a new app that enables users to make sales directly from a business account. The main purpose being a time-saving device, business accounts will also save companies money by cutting out the middleman. Of course, as with any new payment service, there are predictable security risks such as identity theft.

Blockchain and Cryptocurrencies

Blockchain allows data to be stored across thousands of servers worldwide. It’s made up of a list of interlinked records. Blockchain has exploded with the arrival of cryptocurrencies.

Cryptocurrencies are popular because they’re quick and easy, not to mention a more secure way to pay online. Another positive is that they don’t need to be converted into any other currency, if you pay in bitcoin, for example, the payment is received in bitcoin. Blockchain could be great for your small business, as it allows you to store data more securely across multiple locations.

Artificial Intelligence (AI)

Artificial Intelligence (AI) is already present in more fields than you might think. In manufacturing AI is used to allow learning robots to assist human workers, learning, and evolving as they go. AI also plays a part in customer service for many companies. The technology can interact with customers in place of a real human customer service rep, this way it can save you time finding solutions to problems and addressing complaints. Five9, in partnership with Google Cloud, is an example of how AI technology is integrated with customer service. 

Autonomous Driving

Self-driving cars are being developed, so this could be a trend you’ll see being implemented into many businesses. Tesla has released semi-autonomous cars that rely on the Autopilot system. The latest models offer some automated features already and come with the promise that later it will be possible to upgrade them to full self-driving capabilities in the future. The software itself is set up so that it can be programmed to be updated when the technology is released on the market.

Ford is planning a range of driverless cars for 2021. They plan to employ radar technology, 3D mapping, and camera sensors to produce a car with no need for human intervention. The technology at the moment is based on surround cameras, ultrasonic sensors, and an enhanced processing radar, that boasts that it can detect data even through harsher weather conditions. The technology, therefore, is stated to work better than human senses.

Cybersecurity

The COVID-19 crisis has brought about new IT challenges. The main reason for this is that organizations have needed to adapt quickly to operational and functional challenges. Current security protocols have had to be overlooked, and many may not apply to new systems and tools that have hastily been put in place. This level of uncertainty can be exploited by cyberattackers.

There are plenty of other reasons why security might be at risk. It could be due to accessibility settings, or older software. Without adequate software, your PCs will not be compatible with the latest security updates. Hardware also needs to be regularly updated, as any failure could also increase the risk. If you need anything repaired it’s a good idea to sort it out immediately for the sake of security. Search online for computer and printer repair near me.

Many businesses are now using managed service providers and cloud hosting to secure their data. If your server has reached capacity or you don’t have the technology to securely maintain the data, it’s possible to outsource this to another host. This is known as colocation hosting and several companies offer this service. Check out the best colocation providers at the moment. This will keep your data secure at a remote location. 

Data Turnaround

Even though people are suddenly very aware of the importance of data security and privacy, it’s becoming a trend to allow third parties access to your data to help your business. With advances in fintech particularly it’s actually becoming a trend to make your data more disposable and accessible. It’s been predicted that businesses will use secure technology to make their data available to third parties to complete services or transactions. In the financial sector, the pressure is being applied to allow data to be shared with other providers, for example with Open Banking. The increase in data security enables this.

You also have to think about the data security and privacy issues of your consumers. This is why it’s vital to make sure your website is asking for the appropriate consent around cookies, and why you might want to run a cookie checker to check that you are actually doing this. If you can do that right, you might find that you are going to have a much better chance of managing data properly.

Edge Computing

The “edge” refers to the edge of your network where data is collated, rather than in a centralized data-processing warehouse. This means that large amounts of data are processed near the source where it’s generated. This reduces cost with high internet bandwidth usage and allows applications to respond in record time, even remotely. Because of its close proximity edge computing allows sensitive information to be filtered and is a much cheaper option. Read more about how edge computing has entered the mainstream. 

Facial Recognition Technology

According to a 2018 study, 62% of businesses were already using some sort of biometrics as a security measure. Fingerprint and iris scanners along with voice and facial recognition is becoming more common in a variety of fields and devices.

Face scanners are being used to allow admission to the Tokyo Olympics 2021 for example. So far the general public has been very accepting of facial recognition technology. Seen as it has been so well received, it’s likely to keep trending in a number of areas. This once futuristic seeming security measure has brought peace of mind and trust to a lot of people. 

Natural Language Generation (NLG)

Many citizens have happily brought this into their homes with the likes of Alexa and Amazon Echo. The technology is advancing beyond just being a talking radio, and it’s humanizing effect on data means it can now provide insights into everyday life, not to mention business. The NLG devices can be used to display data and information in real-time and by voice activation control. 

There has been a lot of development in the virtual voice experience technology. It’s now being implemented in customer service and online chats. With the combination of AI technology, the software can almost replace human customer service agents. Many consumers still prefer to speak with a real person however, so it might take some time to gain trust and popularity. 

3D Printing

This is just an example of the advances in design and production technology that has really taken off. 3D printing is not just experimental anymore and used only for prototypes. In fact, it has moved on to high volume production. If your business is looking to invest in this groundbreaking technology you can integrate it into your factory line. Your investment will be compensated fully by increased production speed, efficiency, and accuracy.

The Introduction of 5G

This has been a controversial topic already without a lot of polemic and misunderstanding around 5G technology. Currently, 5G is present in a number of mobile phone networks across the globe. It provides increased speed and high-quality video streaming. It’s possibly the future of connectivity in business because this is the way many companies are going. Virtual conferencing has become the norm, with only technological issues such as a poor connection getting in the way. It also gives businesses the opportunity to save on overheads as employees can all work remotely. 

The impact of the COVID-19 outbreak on business has made the world see how much we rely on advances in technology. The way in which businesses have had to adapt quickly to the WFH transition has been pretty much successful due to digital resources. Without cloud backup and remote communication devices, it would have been more challenging for everyone to work from home. Changes have certainly been made on how people do daily tasks and this will only lead to interesting developments for the future of business.