Technology will revolutionise the life of the industry

A new report launched today spells out why automated underwriting systems will be instrumental to the future the life insurance sector.

Munich Re Automation Solutions, the reinsurance group’s provider of digital new business, underwriting and analytics solutions to the life insurance industry, has created a report that aims to lay out the next generation of automated underwriting.

Augmented Automated Underwriting: the next generation of underwriting highlighted the common challenges faced by the life insurance industry and illustrated how augmented automated underwriting (AAU) will help firms face these head on to achieve common goals.

The report explained: “Currently, the life insurance industry exists in a world where customers’ expectations have been transformed by technology in both their personal and professional lives. Convenience and speed are now of supreme value and place traditional life insurance practices in an unflattering spotlight. Attracting, engaging and retaining customers through the entire onboarding process is becoming ever more challenging, putting margins at risk.”

It warned, traditional sales techniques are losing their appeal, which is deeply problematic for life insurers given it is traditionally a ‘sold’ product.

Munich Re said AAU is being hailed as the fifth generation of the digital evolution of underwriting and is the product of three critical components: technology, analytics and insurance expertise.

Paul Donnelly, Executive Vice President EMEA, at Munich Re Automation Solutions said: “AAU provides the answer for two of the biggest priorities for life insurance firms, meeting the expectations of an increasingly tech savvy customer base, and satisfying internal pressure to bring down the cost of onboarding. Those who successfully adapt will be able to harness the power of AI to unlock greater business value from advanced analytics applied to an ever-increasing list of data sources. Ultimately, this will allow firms to transform their customer experience, offering a journey which is easier, quicker, and less likely to be uncompleted.”

Mr Donnelly added: “This technology is allowing us to reinvent the customer experience of the life insurance market, whilst making sure that firms don’t fall foul of regional data regulations. Augmented automated underwriting will allow greater underwriting accuracy, minimise false positives, and reduce spikes in risk.”

“Additionally, a key advantage of AAU is that it can be built into existing systems, however this is a complex journey, so firms need to select the right partner to ensure implementation success.”

The report said AAU is about “revolutionising the customer experience for the better”.

“A generation of consumers, well-versed in researching, buying and reviewing products online, has entered the market for life insurance – but they are facing a buying experience that does not align to the expectations of ‘digital natives’,” it added. “As a result, our global customer base faces a broadly consistent set of challenges, despite regional differences.”

It concluded that a revolution had to happen if the market were to remain fit for purpose in the future.

“Revolutionary in its impact, evolutionary in its implementation, AAU is the product of three core components: technology, analytics and insurance expertise,” it said. “While the first two components suggest an inevitability to the adoption of AAU, as life insurance cannot evade the onward advances in these core areas, the third component affirms that inevitability does not equal success.

“Ultimately, selection of the right partners, developers, and providers will be a critical factor in the successful implementation of AAU technologies. AAU also raises questions that individual businesses, underwriters, and regulators will have to address.

“Fortunately, some answers may prove less elusive than initially thought; in fact, many of the challenges associated with AAU have already been addressed in previous evolutionary stages of the technology with the help of the appropriate partners and providers.”

“Ultimately, if primary insurers wish to ensure the long-term sustainability and profitability of their businesses, they must have confidence in the underwriting engines and digital roadmaps that they have developed in response to AAU,” added the report. “The successful adoption of AAU will facilitate the incorporation of increasingly sophisticated, truly intelligent artificial intelligence that can unlock greater business value from an increased number of data sources.”