How Underwriting Automation Impacts Reinsurance

By Insurance CIO Outlook | Monday, June 15, 2020

 Underwriting automation is enabling the reinsurers to achieve better operational efficiencies while estimating the various policy risks.

FREMONT, CA: One aspect of reinsurance that involves and benefits from frequent customization is underwriting. Documentation in a reinsurance agreement on how the underlying business must be written and how the claims processing should be addressed is an important segment of reinsurance. While conventional means of underwriting involved immense manual efforts, new technology such as artificial intelligence (AI) results in major changes in the legacy insurance solutions. Underwriting automation is one such aspect that has gained popularity among the reinsurers in the past few years.

The automation of underwriting processes is transforming the role of the reinsurance underwriters. Considering the various anticipated benefits of underwriting automation, reinsurance underwriters will be better able to customize products and services according to the needs and demands of the clients. Administrative overheads, such as time spent on manual and redundant tasks, will be reduced, allowing underwriters to focus on complex and strategic risks. Thus, the reinsurers will be engaged in more productive tasks that require human intelligence. Decision-making will also be enhanced with the help of automated systems, especially with the aid of technologies such as big data analytics. 

As automation utilizes data for its input, data-driven underwriting processes will further reduce instances of manual mistakes. Further, automated underwriting is also expected to offer more consistency to underlying decisions. Underwriters may also achieve efficiency gains due to the improved precision offered by automated solutions. It is also anticipated that automation will evolve reinsurance from risk protection to risk prevention as firms can use big data and analytics to understand claim patterns. The above capability will enable the reinsurance firms to reduce losses by estimating potential liabilities in advance. 

Various reinsurance companies have realized the essence of automation in underwriting processes and are using the technology for the same. Advancements in data and analytics capability will certainly convince reinsurers to adopt automation across the reinsurance processes.

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