Historically, automation and flexibility have been at opposite ends of a spectrum: The more you automate something, the less flexibility you have. But it doesn't have to be that way.
As Megan Roche Pilcher, SVP and insurance go-to-market leader at IntellectAI, explains, AI has progressed to the point that it can automate significant chunks of underwriting. It can eliminate the keying and rekeying that traditionally happened as a submission went through a series of steps that might eventually result in a proposal and bound policy. At the same time, AI can pull together third-party data to enhance what's in the submission and can steer underwriters toward key issues, while enhancing collaboration with others in the enterprise who've dealt with those issues before. That automation enhances flexibility by freeing underwriters to do the important work that only they can do.
The flexibility is especially important in the insurance line that is our focus this month: cyber. It is changing so rapidly and unpredictably that we all have to stay our toes.
IntellectAI is working with a lot of innovative MGAs and specialty carriers in the cyber insurance space. How are you—and they—seeing the market develop?
Megan Roche Pilcher:
There's a ton of opportunity for growth, and the cyber market is changing rapidly. Carriers and MGAs have to be able to respond quickly and appropriately with terms and conditions and pricing, to make sure they're providing the right coverage at the right premium for the accurate exposure.
Historically, the more flexible and responsive to the market carriers needed to be, the more they relied on manual processes to make this happen. People don't automatically think of insurance automation and flexibility together because of past experiences with old monolithic systems. But that's changed.
Underwriting discipline is critical—and automation can help. Technology using artificial intelligence and natural language processing is now available, removing much of the keying and rekeying of data, enabling carriers to home in on the risks they want to write and can win. With automation, underwriters can devote their attention to understanding how an organization uses and stores data, and properly assessing an organization's security posture. An underwriter needs time to really understand a risk's cyber exposure in order to adequately underwrite it. Technology can create this capacity.
Can you paint a picture for us of how automation helps?
Often, current state looks like this: A risk comes in the door, and someone has to enter the account name, effective date, who the agent or broker is, the lines of business and so on into a tool for account clearance. Then, someone else will key in all of the same information, plus all of the exposure info, limits and deductibles, to rate the risk. A proposal has to be created...which usually means rekeying the same info into a Word document...updating it again if the account is bound. Finally, when the policy is issued, it often gets keyed into another system. Besides being heinously inefficient, all the rekeying impacts service to the agent, and is ripe for data inaccuracy.
Now let me tell you about the Utopia that we have enabled with technology. When a submission comes in the door it is automatically ingested and all of the relevant account, rating, and exposure information is extracted. AI is used, and knockout rules are applied to immediately decline submissions that are outside the insurer's appetite. This way no underwriter time is wasted on risks you have zero appetite for.
Then, we can run business rules against the extracted data to identify the remaining submissions that best meet the insurer’s target market.
You're on a roll. Please keep going.
Now the underwriter enters the picture. They open their underwriting workbench and new submissions having the greatest chance of winning appear at the top. The underwriter clicks on the account and not only can they see all of the information in the applications, loss runs, and attachments but there is also risk score to indicate the network security and hardened control present in the organization. AI and third-party data enrich the submission information, highlighting exposures they might want to pay special attention to or ask the agent about.
Automation promotes collaboration, too. In manual processes, a lot of information just sits on an individual's desktop in Excel or a Word document. In our underwriting workbench, we have a tool that lets you look at "accounts like mine." It pulls up risks similar to the one you're looking at that have already been quoted, so you can gain from the experience of other underwriters in the organization. You can see how they’ve crafted insurance programs and what kind of pricing they've used.
With the click of a button, the risk is rated, and the underwriter can price the account and document as they go. The underwriting workbench identifies any places where the underwriter's authority has been exceeded and an automated referral process kicks in.
You can have all these very fluid business rules to make sure there's collaboration on the risks that require it. With one more click, a proposal is generated and emailed to the agent or broker.
I imagine the reduction in drudgery could make underwriting jobs a lot more appealing to younger folks and help address the sorts of staffing issues that many companies are facing.
Definitely. Data entry isn't typically a coveted career path. That said, automation doesn't mean getting rid of people. What it does mean, is focusing people on meaningful and rewarding work, as well as revenue generating activities. Automation allows companies to focus on building a true underwriting career path that develops skills and a culture that allows them to retain talent.
There's a culture shift, too, as Gen Z enters the workforce. Their productivity is directly related to technology. They expect the latest tools and technology to do their jobs. Not manual workflows and Excel spreadsheets. They want to be developed and they want to grow.
Final question: While you're focused on improving the underwriting process, how would you summarize the outlook for the market for cyber insurance?
Although Cyber insurance has been in the market for 20 years, there is now a heightened awareness of cyber risk especially with the looming threat of ransomware attacks. Cyber exposure has gone up. Frequency has gone up. Severity has gone up. So, you've got more opportunities in the marketplace. And companies are shopping to find the right balance of the coverage they need at a premium they are willing to pay.
Insurers really need to understand and think about where they want to play in the space of this opportunity.
In times of rapid growth, underwriting discipline is key. But underwriting discipline doesn't mean you have to go slower. Underwriting discipline means really focusing underwriters on the right risks and the right activities. Leveraging technology like artificial intelligence is becoming table stakes.