AI will not replace the role of underwriters, but underwriters will need to utilize AI to enhance their work will thrive. However, it’s crucial to acknowledge the underlying concerns.
Goldman Sachs projected that AI could potentially replace over 300 million jobs. Additionally, a McKinsey & Company report suggests that by 2030, around 14% of the workforce might face the need for a career transition due to AI’s impact. Another McKinsey report indicates that 60-70% of tasks could be automated in the future.
The question arises: Will AI supplant underwriters? Can AI truly comprehend the complexities involved in risk assessment? Will it entirely replace underwriters, or will it serve as another tool in their arsenal?
A Day in the Life of an Underwriter
Underwriters play a pivotal role in the insurance domain, primarily focusing on risk assessment and defining the terms and conditions of insurance policies. Their duties encompass evaluating applications, analyzing risk factors (such as age, health, and occupation), and establishing premium rates to maintain profitability while ensuring competitive pricing.
The insurance underwriting process is multifaceted, involving stages like risk evaluation, coverage determination, pricing, policy issuance, and follow-up. Initially, underwriters scrutinize applications to determine coverage and conditions. Subsequently, they assess pricing based on risk analysis, issue policies, and oversee any ensuing adjustments or follow-ups. This process entails a blend of manual assessment and automated systems, utilizing tools like medical history summaries, blood tests, and paramedical exams to evaluate an applicant’s risk profile.
Will AI Replace Underwriters?
The notion of AI replacing underwriters overlooks the nuanced expertise these professionals offer. While AI excels in processing extensive datasets and identifying patterns, it lacks the human capacity for judgment and empathy crucial in risk assessment.
The integration of AI in insurance seeks to complement, not supplant, the human element. It streamlines routine tasks, enabling underwriters to concentrate on intricate cases where their expertise is indispensable. This collaborative approach underscores that, despite technological strides, the human touch remains pivotal to the future of underwriting.
The consensus is that AI, machine learning, and business rules engines will aid but not replace underwriters. Traditional underwriting methods will evolve, with underwriters transitioning to more strategic roles rather than solely focusing on risk management. AI will handle routine tasks such as data entry, while human underwriters will intervene when necessary, particularly in risk monitoring.
AI-enhanced underwriting will minimize human error, as AI remains unaffected by fatigue or stress, consistently making decisions regardless of time pressure.
Skilled underwriters will focus on delivering quality work, benefiting both insurers and policyholders. Streamlining underwriting processes will contribute to a positive customer experience.
Conclusion
Underwriters need not fear artificial intelligence; instead, they should embrace it as a means to expedite and enhance the insurance underwriting process. AI’s ability to handle certain tasks allows humans to focus on areas where human intervention remains essential. It’s a symbiotic relationship where AI supports humans, not the other way around.
It’s important to trust an experienced technology partner when implementing new technology, such as a company like Decerto. With their expertise in the insurance industry, they can guide underwriters through the digital transformation process.
