Select Page

Underwriters have more digital tools at their disposal than ever before, but the reality is, much of the
underwriting process continues to be manual. It’s convoluted, complicated, and time-consuming, with a low
quote-to-bind ratio in most lines. There are reasons for that. One is carriers’ long history of doing business
that way. Another is the irony that insurance organizations tend to be risk-averse, especially when it comes
to trying new technologies.

Change is challenging, but it is particularly tough for industries that have formed habits over decades
or even longer, as the insurance industry has. Trying to modernize underwriting by overlaying digital
technology is a misguided approach that will not produce the desired results. Digital innovation on the front
end simply cannot compensate for inefficient analog middle and back-end processes.
Insurance carriers must change how they underwrite because the proliferation of data and the profitable
growth opportunities available to those that use data effectively will quickly leave laggards and nonadopters
behind. Companies that embrace digital transformation give themselves the best chance to attain
a sustainable competitive advantage.

“Hockey great Wayne Gretzky holds career records for goals and assists in large part because
his philosophy as a player was, ‘I skate to where the puck is going, not where it has been.’ That
is essential advice for the insurance industry, in the context of data and technology.”

To better manage risk and become more efficient, profitable, and responsive to customers, the industry must adopt digital technologies that enable agents, brokers, and carriers to shift from a traditionally reactive mode to anticipating customer needs. Carriers have long relied on agents and brokers to validate and vet the business they underwrite. Right now, they can perform that vital role faster and more accurately with data and online mechanisms.

The market segment nearly everyone is chasing is small-commercial. It’s an opportunity of at least $100 billion, but the expense ratio in pursuing it through traditional methods would be so high that carriers could not make money. The onlyway to profitably serve this segment is through advanced digital technology.

How can carriers get there? A major hurdle to digital transformation is the carriers’ mindset on using and sharing data. Carriers lack the ability to navigate, cleanse, and manage third-party data sources on their own. They need the help of true data strategists who know how to consume data, evaluate items, and scale them. Carriers also must stop putting themselves at a competitive disadvantage by not sharing data. In a data-rich environment, profitable growth lies in efficient ways of sharing and deriving insights from data. Modern data providers understand this, and insurers that do not will struggle to use data strategically.

Digital transformation in insurance is achievable. We think there’s a predictive model in the head of every underwriter. The challenge is to get that expertise into the system, the technology infrastructure, and the organization so the next generation can absorb it and use it. In the future, underwriters and claims professionals will be technologists.

This blog article was originally published as contributed content in Chisel AI’s eBook, Underwriting Priorities 2020.  To download the complete eBook, please visit