AI and Automation in Underwriting: Enhancing Efficiency or Adding Complexity?

By 2034, global AI in the insurance industry is expected to grow to USD 141.44 billion, at a 33.06% CAGR. AI specifically in the underwriting process is projected to grow to USD 41.1 billion by 2033, at a CAGR of 31.8%. Technology is expected to revolutionize underwriting operations with the rising demand for automation in the underwriting industry among stakeholders and investments in building advanced systems.  

Gartner predicts that by 2025 over 50% of underwriting tasks will be automated. This promises a paradigm shift, replacing the current reactive “detect and repair” model with a proactive “predict and prevent” model, as envisioned by McKinsey. Furthermore, 88% of small business owners find automation boosting their competing power with larger companies, highlighting the efficiency gains and competitive edge that automation offers. 

Automated Underwriting is Transforming PEOs 

Professional Employer Organizations (PEO) are already experiencing the benefits of automated underwriting. These underwriting systems automate submissions and evaluate the submissions based on the predefined logic, which provides underwriters with insight into risk profile, program eligibility, and pricing, and accelerates decision-making. This empowers underwriters to: 

• Expand their risk view  

• Improve risk prediction and management 

• Enhance efficiency 

• Reduce manual effort 

• Improve consistency  

• Accelerate response times  

The Increasing Workload Paradox: Does AI Increase Underwriters Workload? 

Despite the expectation that technological advancements and automation would lessen workloads, 2021 P&C Underwriting Survey from Accenture and The Institutes presents a contradictory case. 

According to the survey responses, an average underwriter spends 39% of their time on administrative tasks, 31% on negotiation and sales support, and only 30% on actual underwriting. If you think bringing technology to the workflow will reduce the burden of the underwriters and automatically enhance quality of underwriting, the respondents report otherwise. Although most think automation has helped them, a staggering 64% of them mentioned that technology has not changed their workload or worsened it. 

Source: Accenture 

That said, the survey respondents acknowledge that technology has streamlined faster quote generation, the ability to handle many businesses, the ability to access knowledge, ease of work, and the ability to rate and price, as the top areas of impact in underwriting. Furthermore, the perception of increased workload due to technology intervention has reduced from 54% in 2013 to 26% in 2021. Historically, this trend is positive, though it still has a long way to go, because only 35% of the respondents felt that AI had driven more efficiency. The respondents suggest that improvements in data and process integration, system performance, simplified systems/tools, and enhanced training will help to further decrease their workload.  

Reaping the Benefits of AI and Automation for Underwriting 

To overcome these challenges and fully leverage the power of AI and automation in underwriting, PEOs must integrate their technologies, creating a unified and efficient platform. This integration is crucial for addressing the perception of increased workload.  

AI and automation advancements are transforming the underwriting landscape for improved efficiency and risk management. PEOs must address the lack of technology integration to leverage the full potential of AI and automation. By incorporating integrated underwriting technology, PEOs can not only reduce underwriter workload but also improve underwriting accuracy, accelerate decision-making, and gain a competitive advantage in the market. 

However, simply integrating technology is not enough. PEOs must also focus on improving system performance, user-friendliness, and technical training, to fully realize the benefits. 

This is precisely where InsureComp excels. Our robust platform optimizes underwriting, risk assessment, and pricing for PEOs, providing seamless integration with other technologies, an intuitive interface, and comprehensive technical assistance, enabling businesses to improve efficiency and underwriting quality. If you are interested in understanding more about our underwriting technology that offers extensive benefits, contact our resident experts at ____ (email id) today!