Insurers optimistic about AI impact on underwriting quality
Source: Middle East Insurance Review | Jun 2024
Almost two-thirds (62%) of insurance executives recognise AI and machine learning technology as elevating underwriting quality and reducing fraud in the insurance industry.
According to the 36-page Capgemini Research Institute’s World Property and Casualty Insurance Report 2024 Become an Underwriting Trailblazer, nearly 43% of underwriters trust and regularly accept automated recommendations from predictive analytics tools but many still have concerns around complexity and data integrity of the process.
The report released in April 2024 reveals that the underwriting capabilities of insurers are being restricted by organisational constraints. According to the report, only 8% of property and casualty (P&C) insurers are regarded as underwriting ‘trailblazers’ who are consistently outperforming mainstream carriers by leveraging AI-driven insights and automation to make informed decisions and accurate risk assessments with efficiency.
These industry frontrunners drive greater collaboration and customer transparency by keeping underwriters at the heart of all decisions. As inflationary pressures hit policyholders’ pockets, there is increased demand for affordability, simplicity and transparency from their insurers.
According to the report, 42% of policyholders find the current underwriting process complex and lengthy. Additionally, 27% of policyholders switched providers in the last two years in search of lower premiums (60%) and better coverage (53%).
While premiums have increased, underwriting practices have struggled as combined ratios breached 100% sparked by natural catastrophe events, evolving risks due to technology innovation such as cyber threats and emergence of generative AI and regulatory complexity.
Capgemini research shows industry executives cite significant organisational barriers affecting their ability to delight the customer: insufficient access to data (54%), legacy systems (51%) and a lack of skilled talent (47%). M