A recent survey of insurance insurers found that 40 percent of their time is spent on “non-core tasks” of underwriting. The top three reasons they gave are:
- Redundant inputs/manual processes;
- Outdated/inflexible systems; and
- Missing information/analysis at the point of need.
The survey, conducted by The Institutes and Accenture, also found that underwriting quality processes and tools are at their lowest since the first survey in 2008. superior” – that is a decrease of 17 percent compared to 2013.
“While underwriters believe technology changes have improved underwriting performance, 64 percent said technology investments have increased or not changed their workload,” Christopher McDaniel, president of The Institutes RiskStream Group, told attendees at the Joint Industry Forum by Triple-I.
The results of the survey on talent may shed some light on this. The number of organizations considered to have “superior” talent management capabilities for underwriting has fallen by 50 percent since 2013 across nearly all KPIs assessed.
“Training, recruiting, and retention planning had some of the biggest takedowns, particularly in personal lines,” McDaniel said. About a quarter of personal lines insurers said they see deficiencies in their organization’s talent management programs. That rate rose to 41 percent for talent retention; 37 percent for succession planning; 33 percent for in training; and 30 percent for recruitment
“While technology investments may have improved underwriting performance related to underwriting, quoting and sales,” McDaniel said, McDaniel said these improvements “appeared to have come at the expense of training and retaining underwriting talent,” McDaniel said.
Even before the pandemic and “the big resignation,” the insurance company faced a talent gap. Part of the challenge has been finding replacements for a rapidly retiring workforce, as the average age of insurance company employees is older than in other financial sectors.
A McKinsey study assessing the potential impact of automation on functions such as underwriting, actuarial, claims, finance and operations at US and European companies found that as underwriting becomes more technical in nature it also requires more people skills and flexibility. McKinsey survey respondents said automation and analytics-driven processes will create a greater need for “soft skills” to design and interpret quantitative results. Adaptability is also becoming increasingly important for underwriters to be able to respond to changing risks and learn new techniques as technology changes.
“Underwriters will not become programmers themselves,” says the McKinsey report, “but they will work extensively with colleagues in newer digital and data-centric roles to design and manage underwriting solutions.”