Underwriting needs humans at the controls

Underwriting needs humans at the controls
AU is vital for insurance but humans need to define the rules, Swiss Re has said. [Photo by Tara Winstead via Pexels]

Insurers must embed automation more effectively into their processes but a human will always need to define the underwriting philosophy, a protection specialist has claimed.

Swiss Re's Carl Christensen, global head of life and health solutions for the insurance giant, told FTAdviser it was vital that the protection industry continues to press ahead with embedding technological solutions.

AI, and its cousin automated underwriting, both bring advantages in terms of efficiency, speed and greater potential accuracy to the entire insurance process, he claimed.

Already many companies have been investing in AI and AU for several years. Christensen said the UK insurance industry was "far advanced" on this journey, which has been ultimately for the benefit of consumers and brokers.

He said: "Ultimately almost all insurers today have an AU in one way or another. This means the key evolution is now around data analytics in order to optimise further areas of AU. All with the aim of making the process more efficient for brokers and consumers."

But when it comes to automated underwriting, some brokers have expressed concern that an automated process could end up with a 'computer says no' situation in more specialist cases, as reported last week by FTAdviser

At the time, Kathryn Knowles, co-founder of Cura Financial Services, warned: "For some applications greater automation will work well.

"But I’m very concerned about this making it harder for people to get insurance or having more of a 'computer says no' experience, especially with mental health histories."

Human at the controls

Christensen said AU could be structured to prevent this, adding that the underwriting philosophy had to be "ultimately defined by humans."

He explained: "What AU does is automate existing underwriting philosophies relating to the distinct product. So ultimately it comes down to what product is offered to the client.

"There are a number of products out in the market where the rules are established in a manner that it excludes specific risks - but there are equally as many products which allow risks to be included.

"AU can identify risk factors and ensure they are managed accordingly from a price or product offering perspective."

But he said it was still necessary to have a human at the controls. 

"The underwriting philosophy is ultimately defined by humans. For Swiss Re, this relates to our overall LifeGuide offering, which holds all our life and health underwriting logic.

"Our AU puts these rules into a manner which can automate relevant decisions depending on the data provided through the application process", he said.

Therefore, according to Christensen, the outcome is indirectly always controlled by humans, as they are the ones setting the rules, but the actual processing of applications does not need human interference.

He added: "AU is clearly not the answer to everything. The market is evolving in a way that technology combined with knowledge solutions [such as Swiss Re's like Magnum] can bring new offerings to the market at a much more rapid pace.