By Patrick Ashton, UK operations, Alula Insurance Technologies.

The adoption of accelerated, or automated underwriting, which uses advanced artificial intelligence and machine learning technologies to evaluate risk and underwrite life insurance, has been limited to date. This can partly be attributed to insurers cautiously rolling out automated decision-making, opting instead for small-scale improvements to risk frameworks. The potential, however, for the technology to enhance decision-making is significant if it gets integrated at scale.

According to McKinsey accelerated underwriting programmes have been limited due to insurers being cautious and therefore only making the most basic risk policies available in this process. For those products that are more flexible when it comes to automated underwriting, insurers tend to limit adoption to customers who fit very specific requirements.

These limitations extend to medical criteria as well. For instance, insurers will accelerate only high-quality risks, resulting in many customers beginning an accelerated journey but becoming frustrated when, before the end of the journey, they must move back into a traditional underwriting process. From a South African context, the partnership between SilverBridge and HealthCloud has resulted in the organisation enabling insurers to access medical data in an integrated manner. Furthermore, the process creates digital twins of the best underwriting experts within the business to automate the decision-making process even further. In practice, this sees underwriting decisions being made in seconds, bringing about highly significant cost savings per decision made.

Facial recognition technology can also be used to further improve the accelerated underwriting process. For instance, remote photoplethysmography (rppG) extracts facial blood flow data from a selfie-video app running on a mobile device. The blood flow data is used to predict, or measure, selected physiological and psychological states such as heart rate, cardiac workload, mental stress, and even identify the potential for cardiovascular disease risks. These elements can be used in the underwriting process to eliminate or reduce need for intrusive testing, significantly improving the customer experience.

Enhancing the insurance journey

The restrictive nature of how insurers are working with automation in the claims or underwriting processes means that their customers are limited to basic risk products for improved service options, whilst more complex risk products continue to require onerous and costly medical underwriting. The SilverBridge Smart Underwriting solution enables the required product flexibility while delivering faster decision-making.

Real-time underwriting is enabled by analysing multiple sets of internal and external data simultaneously. Multiple experts within the business can be used for digital twin modelling, giving a far more consistent and accurate decision process. This combination of real-time data and expert models provides the perfect combination of speed and accuracy to mitigate risk whilst providing world class service to customers.

New opportunities

Automated underwriting provides the insurer with a more dynamic way of improving the customer experience. Whether it is in a new application process, or at claims stage, the technology eliminates the risk of manual, human errors while ensuring all processes are auditable and transparent to the customer.

Insurers can also attract more customers with such a digital-native process given how many people today want their service providers to provide digital fulfilment. This is why the concept of a digital twin to replicate the specialist human resources at an insurer is so important. Moreover, this enables the specialists to focus on applying their expertise where it is really needed, such as in improving product offerings or identifying other areas of the business where competitive advantage can be gained.

There is therefore no need for insurers to feel constrained by the products they can apply automated underwriting to. With sufficient high quality data available, and experts within their business, any complex risk product can be automated. Smart Underwriting typically removes at least 80% of the cost from new underwriting decisions and the speed of decisioning provides a brilliant customer experience. This will become the way all products are underwritten in future and the early adopters will find huge competitive advantage in the market.

By injecting technology innovation into all aspects of the life insurance journey, businesses can deliver a more integrated customer experience and also become more efficient in their business processes, surely a win-win situation.