Print

Expert Risk Articles

People innovation: Getting underwriters prepared for the future

Insurers are seeing technology investment as pivotal to improve overall performance and meet client and shareholder expectations. Today underwriting means gathering data to evaluate exposures, a mix of human experience, expertise and creativity and the hard analysis of profiles, trends and market and product knowledge.

Moving forward underwriters will become data scientists. AGCS is working today to prepare tomorrow’s underwriters to become quicker and more granular in classifying risk, resulting in a more customer centric approach and holistic risk skillset.

Preparing underwriters today

Digitalization has already begun to redefine traditional roles like underwriting. Being data efficient and digitally astute is already important and will become even
more so in future. So, what is the profile of tomorrow’s underwriter? How will digitalization redefine the role?

AGCS Underwriting AcademyAt AGCS, an Underwriting Academy is in place to prepare new and existing underwriters to meet the future realities of the role. “The idea of supporting underwriting with technology is nothing new,” says Massimiliano Colombo, Head of the AGCS Underwriting Academy. “First there was Excel; next will be algorithm-based underwriting”.

Insurers have always tried to use technology to drive efficiency, reduce costs and increase margins, but in the past new technologies did not develop as fast or change as often as they are doing so today. Insurers see the technology investment as pivotal to improving overall performance and meeting client and shareholder expectations.

“Moving forward, underwriting will be a mix of ‘art’, ‘science’ and ‘technology’” says Colombo. “Manualdata entry will disappear and underwriting tools will be populated by sources ranging from public records to satellites. The outcome will be a quicker and more granular risk classification resulting in a more customer-centric approach. But the challenge is having the right data.”

Data accumulation has never been a challenge for the insurance industry. The challenge has always been using the data for more effective marketing, pricing
and loss reduction. “We have to make a quantum leap towards the future in our industry,” says Colombo, “in regards to wisely using data”. Digitalization will usher in new skill sets for underwriters.

While digitalization will reduce paper/manual work and actually increase the influx of digital data, it will make the underwriting process more lean. The underwriting role will move from one of technical risk analyst to business development  manager, who will have to add value via product knowledge, sales skills and risk consulting.

“We have to help underwriters develop proficiencies in IT, risk management, client management, negotiation and even more important listening skills to be able to hear clients’ needs,” says Colombo.

Recruiting, retaining and plugging the “brain drain”

The “sharing economy” and millennials’ expectations are testing the status quo. More than ever, insurers are challenged by human capital issues.

The insurance industry is at an interesting crossroads when it comes to maintaining its human capital. Leadership development is a challenge, not to mention leadership acceleration programs. And talent development programs, like the AGCS Underwriting Academy, are investigating new approaches to developing employees to overcome skill disparities.


And the so-called “brain drain”, in which mature experts who are on the verge of retirement leave the company without imparting that knowledge onto a junior, obstruct a natural handover of skills and expertise because of a talent shortage
of new employees being attracted to work in insurance.

“Why does talent shortage happen?” asks Massimiliano Colombo, Head of the AGCS Underwriting Academy. “Because the insurance sector is not seen as attractive to young people. We are perceived as too serious and boring, as bureaucratic and not exciting.”

In a survey of millennials, fewer than one in 10  [1] reported being highly interested in working in the insurance industry. Attracting new talent will be challenging, considering that this generation already makes up about 50% of the workforce. [2]

“In order to attract new talent,” says Colombo, “we have to meet them where they are and become more visible at the university level so the students have a relationship with us and understand we have a lot to offer. AGCS is in touch with
several universities and has seen an increase in the amount of interest.”

Colombo says that a possible idea is for insurers to sign reciprocal secondment agreements with customers which provides for career development opportunities to employees. Such programs also offer the organization the chance to improve skills bases – this could be the perfect tool to both develop the careers of young talents and to provide added value to an important client relationship.

The insurance industry is built on the skill of its underwriters in mediating risk, but there are some warning lights that hint toward future challenges. Now is the time to stem the tide and record the knowledge, experience and even the mistakes of industry professionals before they walk out the door for good.

---

Things companies can do now

> Analyze current workforce strengths and talents to find core competencies
> Determine flight risks (to retirement, recruitment, or family/life pressures)
> Hire retiring employees as part-time expert consultants
> Consider offering retirement postponement incentives
> Use technology to drive virtual, intra-company dialogue and knowledge sharing
> Implement formal mentoring programs
> Cross-train employees across skills (e.g. loss control and underwriting)
> Support employee membership in professional organizations
> Offer incentives for obtaining professional designations
> Form intergenerational teams
> Address ‘brain drain’ strategically; what will the company’s workforce needs be in five years?

---

The future is now

“Digitalization is a wonderful opportunity for all of us,” says Colombo. “It means less paper/manual work and more digital data. Digitalization will make the underwriting process more ‘slim and fast’ so that the underwriting role will move from one of technical risk analyst to business development manager, who must be able to add value via the product/services offered, sales and risk controls”.

###

[1] Millennial Generation Attitudes About Work and the Insurance Industry, Griffith Insurance Education Foundation
[2] Millennial Survey, 2015 edition, Deloitte