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Gaze into Our Crystal Ball: Envisioning the Future of Underwriting
April  2020

What does the future of underwriting look like? SCOR believes the scope and scale of change will occur in three areas and will create a unique opportunity to define a new life insurance paradigm in the near future. The future will be data driven. It will require organizational agility. And, finally, social responsibility will become increasingly important. 

SCOR set out in 2019 to explore this hypothesis with the life insurance market and industry-supporting technology firms. Our goal through this exploration was to share our theory of the future, test whether it resonated with our audience, verify that it provides the right lens through which we can understand our customers’ challenges and hear clearly how we as a reinsurer can best serve our industry. SCOR leaders conducted two- to four-hour sessions with more than 25 different companies. These open discussions around our hypothesis covered all major elements of underwriting today and resulted in deep insights into the challenges faced by these companies. 

Most companies who participated agree the future of underwriting will be data driven. Data is one of the most valuable resources available to companies today, with new layers being added continuously. Computing capability is increasing and development of predictive models using machine learning techniques provide the ability to become much smarter in our assessment of risks. What does this mean for the future of underwriting? Underwriting assessments will be predominantly digital, will be unique to the individual risks and will require transparency.

Most companies also agree organizational agility at their companies will be required to drive innovation in the future. The ability to react and evolve with changes in consumer technology will be a key factor to the relevancy of our industry. A test and learn environment with quick and efficient decision making will be advantageous to companies. 

While many companies have already built social responsibility into their corporate cultures, some participants questioned whether social responsibility conflicts with financial responsibility to shareholders. Other participants believe (as we do) that a clear purpose within a social framework motivates employees and consumers and, within the life insurance space, can be done with complete alignment between the desires of the consumer and those of the industry. Both want people to live long, healthy lives. 

What might this mean for underwriting? 
Information collected during the initial underwriting process won’t be used simply to stratify mortality risk. It will be used to create opportunities to improve the applicant’s financial and/or physical health. Data and AI analysis of that data will create a system of preventative advice that the life industry can make available for the benefit of our insured population.

As expected in any discussion of the future of underwriting, accelerated underwriting, automation and underwriting resources were important topics and drove a large part of the conversation. Challenges and feedback around these topics were varied and provide a number of insights into the different approaches and results experienced across the industry.

As AUW programs continue to meet or even exceed expectations, companies are becoming more confident in their abilities to accurately assess and accelerate risks. Many have already increased age and face amount limits, expanded their programs to include more products, allowed more risk classes and implemented new data sources to increase acceleration and straight-through processing requiring little to no underwriter intervention. 

More companies are also beginning to provide their AUW program results and share their learnings with greater frequency. Based on these learnings and combined with SCOR’s own knowledge and experience, we have identified several common themes or characteristics as to what constitutes a best practice in a successful AUW program. We have also observed the adoption and implementation of these best practices tends to vary by program. SCOR is excited to share these best practices around program goals, transparency and iterative improvement during a future update on Underwriting Reimagined.

All the participants embraced automation to achieve underwriter efficiency to improve the customer journey. Improved efficiency allows underwriters to focus on complex/high risk cases. 
Many companies are in the process of adding automation to their processes and there are a variety of solutions being utilized. Numerous participants indicated their processes, even where automation is a part of the process, requires an underwriter to review every case. However, some companies are using predictive models to drive acceleration with the objective of obtaining the right evidence tailored to the individual risk.

Companies are challenged with maintaining AUW programs as they require considerable resources and commitment to refine and update models and rules, analyze data analysis, test and implement potential new data sources. Traditional underwriting skills will remain important but evolve to include new data-oriented skill sets. Companies are also making a significant investment in data analytics. 

What does the future of underwriting look like? 
The past five years have delivered significant change. The rapid emergence of new technology will continue. This brings with it a need to quickly adapt and evolve. New approaches to customer engagement and smoother customer journeys remain at the forefront. 

Data will become a pillar of an organization’s goal of achieving automation and digitization. This will require more cross collaboration and transparency within all segments of the company. Investments will be made in not only technology but also in culture empowering individuals across all spectrums of an organization to make better, more informed and efficient decisions. 

Automation and the power of predictive models will allow underwriters to focus on the more complex risks and less on administrative functions in the future. Underwriters will broaden their skillsets and expand their knowledge in the older age and impaired risks segments, adding further value to their employers. Underwriting knowledge and expertise will remain a key component to filling in the gaps in automation and linking the various processes and functions together as we define life insurance underwriting of the future.