AI and Underwriters: A Collaborative Future

The use of artificial intelligence (AI) can augment and enhance underwriters’ workflows by promoting better efficiency and accuracy, though it will not eliminate the need for their professional expertise.

It’s true that certain AI capabilities, such as rapid data processing speeds, can’t be matched by human workers. However, the same can be said for AI’s ability to replicate the subtleties and nuances of human critical thinking and problem-solving.

Thus, rather than taking an all-or-nothing approach to AI and underwriting, insurers can enjoy greater synergy by leveraging both human expertise and the strength of AI in the process.

Redefining Underwriting: The Role of AI

AI has been a popular buzzword across all sectors over the past year, including the insurance space, with promising conversations about what AI can help us accomplish and how it will revolutionize the economy. At the same time, there are plenty of misconceptions about what AI can do and its ability to replace human workers.

The World Economic Forum reports that 1 in 5 workers in the United States fear their roles will be made obsolete by AI. Interestingly, Goldman Sachs economists estimate that around two-thirds of occupations in the United States are exposed to some degree of AI automation, though they clearly explain that most jobs will only be partially impacted, with AI complementing human efforts rather than outright replacing them.

This is largely the case in the insurance space. For insurers, there’s potential for AI to support various workflows, specifically data-intensive processes like underwriting. AI systems can process large datasets more efficiently and can automate routine tasks. But this doesn’t eliminate the underwriter role. Instead, it can support and enhance their workflows, giving them more time to focus on complex cases and strategic decision-making while AI solutions handle standard and repetitive cases.

Let’s take a closer look at some of the main advantages of combining AI and underwriting.

Streamlining Data Analysis and Risk Assessment

One of the key reasons to use AI in underwriting is its ability to perform risk assessments and data analysis more quickly and with greater accuracy than human workers alone, making it easier to handle more volume and scale business.

Modern policyholders expect instant gratification from all providers, including their insurers. They want to fill out a policy application online and receive a quote within a matter of minutes – not weeks. Underwriters simply can’t meet these demands through manual efforts alone. The key to accomplishing this speed of service is leveraging AI systems that can process and analyze large volumes of data in a short time frame.

Identifying Emerging Risks and Fraudulent Patterns

Of course, insurers can’t sacrifice quality and accuracy for the sake of speed. Fortunately, AI solutions can also deliver more accurate risk assessments as they aren’t prone to human error or bias and can consider more data inputs for a more complete risk profile. Because of this, another advantage to AI and insurance underwriting is that it’s effective at detecting fraud and helping insurers identify emerging risks that threaten underwriting effectiveness.

AI systems can consider data from a wide range of sources, including both first and third parties, such as social media platforms, satellite photos, and more. Thus, they can detect fraudulent or high-risk behaviors in applicants that might otherwise go unnoticed.

In addition, AI programs can use predictive analytics to assess the likelihood that applicants will make a claim or engage in high-risk or fraudulent behaviors that influence underwriting decisions. AI and machine learning algorithms detect patterns and trends from historical data, which helps insurers proactively adjust their risk assessments and underwriting processes accordingly.

The Human Touch Remains Essential: Why AI and Underwriters Partner

Using AI and underwriting together provides significant benefits for insurers. However, the human touch won’t become obsolete. It’s an essential component of the underwriting process, and AI simply complements underwriters’ abilities to help them work more efficiently.

Here are some of the many reasons why underwriters will maintain their job security even as the use of AI in the insurance space increases:

Using Underwriter Expertise for Complex Cases

Experienced human underwriters are better equipped than AI systems to handle complex policy applications. There’s a limit to the level of context and nuance that rules-based algorithms can capture and utilize when making underwriting recommendations. Human discernment is critical in more complicated circumstances to ensure the full context of the applicant’s case is being weighed and evaluated.

Over time, underwriters have gained hands-on experience with applicants who have unique business or life circumstances that deviate from the norm. However, this doesn’t necessarily mean they are inherently riskier than a “standard” applicant. In these cases, human underwriters take a much more nuanced approach to underwriting to ensure they accurately capture the applicant’s risk profile.

Maintaining Ethical Decision-Making and Customer Focus

Though AI may be able to help eliminate some of the human bias from the underwriting process, AI algorithms can also be prone to bias and produce unfair or unethical outcomes. Thus, even when insurers leverage AI to streamline underwriting decisions, they should maintain a certain level of human involvement to review the algorithm’s recommendations before a policy is issued.

The human touch in underwriting can help facilitate more ethical decision-making, ensuring that pricing and policy recommendations are made in the applicants’ best interests and aren’t unfairly penalizing certain demographics or groups of people. AI may be good at making data-driven decisions, but it’s human underwriters who offer compassionate and customer-focused recommendations that foster trust and loyalty with policyholders.

Innovate for the Future with Insuresoft

Underwriting and risk management practices will continue to evolve as emerging technologies like AI augment insurers’ abilities to deliver quick and efficient service to policyholders. Insurers need to stay open to underwriting innovation, though the notion that AI can (or will) replace human underwriters all together isn’t practical.

Instead, insurers can enhance their team’s risk management practices by leveraging modern solutions, like Insuresoft’s Diamond Insurance Data analytics hub, to access powerful business intelligence that facilitates more data-driven decisions. This allows underwriters to focus on complex cases, while this advanced tool works behind the scenes to monitor evolving risks, compile and process data from multiple sources, and forecast possible outcomes through predictive modeling.

Contact us to see how Insuresoft can be your trusted technology partner and help your team thrive in today’s dynamic insurance ecosystem.