Is the Underwriter an Endangered Species? Jason Pamplin, PhD, Product Manager | May 25, 2017

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Every several years, there’s a wave of articles addressing the question of “whether underwriting matters.” The answer is always the same: underwriting not only matters, it is essential to any insurance company that wants to be profitable. The real question we should be asking is what role underwriters will play as automation reshapes the underwriting process.

AI Everywhere

Most recently, there has been a great deal of swirl around artificial intelligence (AI) and whether this will finally make underwriters obsolete. Once the realm of science fiction, we have already seen AI enter our daily lives. Who would have guessed that we would be asking our phones trivial questions, for example, or controlling our homes with our own voices? We’ve even given our AI systems names: Watson, Alexa, Cortana. Oh my!

As the technology evolves, AI platforms are becoming more creative, “inventing” things that humans previously had not. AI has already created sounds we’ve never heard before, and radical new designs for bridges, cars, and drones.

The data that drives AI systems is becoming easier to obtain, too – yes, I wear a FitBit— and the systems themselves are improving to make sense of the massive amount of information we collect. All this is happening, while technologies such as drones and image analysis programs are making new forms of data available every day. The pace of growth here is staggering.

So, is the underwriter an endangered species, after all? This isn’t a crazy question. It is a fact that underwriting jobs in the insurance industry are shrinking and technology is a contributing factor. (See Will Technology Replace Underwriters? Risk & Insurance Nov 4, 2015.) 

Technology is an Underwriter’s Friend

As a computer scientist who happens to love insurance, I am in the business of making people more efficient. But, what does that mean? Here is my personal definition: people are most efficient when they are doing work that only people can do. Technology has certainly made underwriters more efficient, and as new technologies become mainstream, efficiency will continue to improve, but I don’t think the underwriter will ever become obsolete.

There is a lot of work that underwriters do that computers can and should do. We expect, for example, that underwriters will use a computer-based tool for rating – yes, that includes your trusty spreadsheet. We generally don’t have paper underwriting files anymore. We use email and the internet for ad-hoc distribution of information. And there are other areas ripe for automation, including data gathering, data entry, document creation, and email follow-ups.

While most underwriting change has been evolutionary rather than revolutionary, technology has made each generation of underwriters more accurate and productive than their predecessors. Computers have been at the heart of our industry since the first mainframe was birthed, and as they mature they will continue to perform more of the work that people currently do.

The People Factor

While computers can come up with creative ideas, they will never be as good as people at determining how applicable those ideas are in the market. Who will decide which of the myriad of creative options generated by AI will be acceptable to an insured? Who will build the relationships to help customers understand and express needs that they lack the language to describe? Who will anticipate risk based on industry conversations before there is any real data to support it (aka street smarts)? Who will provide design input on the next wave of insurance delivery systems? In each case, it’s intangibles like these that will still require a human touch.

The trend in technology should be encouraging for underwriters. Each new piece of technology we introduce is more suited to consumption by people. A focus on “user experience,” “customer satisfaction,” and “ease of doing business” are all driving this improvement. These systems are built by people to serve people and thus need people, including underwriters, to be successful. The Terminator is fiction. You aren’t in the Matrix.

The underwriting role is certainly changing, and technology is playing a big role. Those that embrace this change, adapt to it, and begin to shape it by focusing on the people factor will thrive.

Jason Pamplin has a vast background in the insurance industry, working as the CIO of Thomco Insurance, IT Director at Markel and the Manager of Engineering Services at Vertafore. He is currently the Product Manager for Instec Underwriting. With his deep experience in IT, and vast knowledge of underwriting functions, Jason brings years of industry experience to the team, and is a key player in guiding IT solutions and deploying them. Jason has a PhD in Computer Science from Georgia State University.