From Snail-paced to Super-fast Underwriting: AI in Insurance is a Blessing in Disguise

INSURANCE –The word alone might make you visualize piles of paperwork, drawn-out processes, and tedious back-and-forths. Traditionally that’s exactly how it was—a slow moving giant. But behind the curtain of this oh-so-sluggish industry, a dazzling transformation is taking place.

We are stepping into an entirely new era of underwriting, powered by the new-age forces of:

These technologies are empowering insurance firms to:

·         Simplify underwriting

·         Standardize administrative tasks

·         Extend personalized offerings

What once took DAYS or WEEKS can now be completed in LESS THAN HALF OF THAT TIME—with better accuracy and precision. This is the future of insurance, rewriting the rules of underwriting by AI.

The Pain We’ve Endured—Until Now!

Let’s reflect on what has been holding back insurers and their customers for so long.

Outdated processes have shackled traditional underwriting, dragging down efficiency, personalization, innovation, and efficiency.  Manual tasks, fragmented data, and aging systems have made applying for insurance a task. Customers? They are understandably frustrated and not shy about moving on. In fact, Accenture’s Global Insurance Consumer Survey found that 42% of customers would happily switch providers if the application process was faster and easier. And, it’s not only about speed. Lack of personalization is a significant issue. In a world where everything is personalized—whether it’s your Spotify playlist or your meal-kit delivery—it’s surprising that insurers are still left behind when it comes to offering customized insurance plans.

A 2023 J.D. Power study revealed that 62% of U.S. property and casualty insurance customers are interested in more customized coverage.

Moreover, the issue extends beyond speed and personalization. There are problems with inaccurate risk assessment. With outdated methods that rely on limited data, misclassification is often the result.  For instance – a study by researchers at The Wharton School found that traditional underwriting methods, which mostly take into account factors, such as age, location, and driving history, resulted in a 17% misclassification rate for young drivers. This meant a substantial segment of the high-risk drivers were incorrectly labeled as low-risk, resulting in underpricing and potential losses for the insurer.

On top of all these challenges, operational inefficiencies plague the underwriting processes. Property and casualty underwriters are constantly juggling things, including validation of documents, meeting compliance regulations, and staying competitive with pricing. All these tasks are being tackled in the absence of the right analytical tools. Therefore, it’s no surprise that application abandonment rates can soar as high as 70%, as reported in Verisk’s 2023 Insurance Trends Report. That’s a significant chunk of potential business slipping away like sand through fingers.

A large chunk of potential business slipping through the cracks.

AI And GenAI: The New Era of Intelligent Underwriting

Now for the good news, AI and GenAI are here to rescue, totally transforming the insurance space. It has taken over the manual administrative tasks, made risk assessments smarter, and streamlined the process of offering personalized insurance. Here’s how the dynamic duo—AI & GenAI—are making waves:

• AI-powered Data Analysis: AI makes it easy to process oceans of data—from telematics to medical records—without breaking a sweat. It pulls information from diverse sources and delivers real-time risk analysis, offering underwriters a clear and comprehensive view of an applicant’s risk profile
• Advanced Risk Assessment: Thanks to machine learning, AI detects patterns and complex connections that humans often tend to miss. These smart predictive models provide precision-driven risk predictions, resulting in smarter pricing models—eliminating the need for wild guesses
• Intelligent Automation: AI handles routine administrative tasks, such as data entry and document verification, freeing underwriters to focus on complex tasks, requiring expertise and depth. This shift not only increases efficiency but also ensures better decision-making where it matters most
• GenAI-driven Product Development: GenAI can analyze market trends and customer data faster than you can say “actuarial risk stratification” or “risk-based segmentation.” This enables insurers to create tailored policies that meet individual expectations, leading to happier, more satisfied customers

Read the full blog here

Newgen is Here to Help at Every Step of the Way

Rushing into this new frontier without proper support may fall flat.

At Newgen, we’re leading the charge with our AI-enabled intelligent underwriting solution, designed to address insurers’ day-to-day challenges. Our solution, built on a low-code platform, doesn’t just streamline underwriting—it transforms the end-to-end process.

Our automated workbench solution seamlessly integrates AI within a dynamic rule-based engine, orchestrating workflows and enabling smarter decision-making.

And we go beyond simple automation, empowering insurers to:

· Standardize data for easier analysis

· Verify documents in a snap

· Detect fraudulent applications before they cause issues

· Ensure compliance with internal policies and regulatory mandates

· Integrate analytical tools for comprehensive, real-time risk analysis

· Prevent overexposure or under-pricing, keeping policies profitable

Summing Up

Underwriting has entered a new era, with AI and generative AI, leading this transformation. What used to be a slow, paperwork-heavy process filled with uncertainties is now fast, accurate, and hyper-personalized. AI is taking the guesswork out of underwriting, helping insurers assess risk with greater precision and provide policies that are more tailored to individual needs.

Now, it’s all about delivering the right policy at the right moment, with clarity.