CPCU ANNUAL MEETING
Future of underwriting
September 2016
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TECHNOLOGY IS DRIVING SEISMIC SHIFTS
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1. The Manual to Digital Shift
Driverless cars Smart machines with ability to think Wearable devices
Technology is fundamentally challenging assumptions about what is a machine – covering all aspects of life making work easier, simpler, better – almost like a super-human assistant
There is a superhuman assistant for all your needs….
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2. Mobility and Flexibility
Technology is changing how things are done , mobile work from home, closer collaborations – sharing screen data, editing one video, one document being worked upon by multiple people, social networks
Time and place no longer matter – anywhere anytime is the buzz-word
Source: Citrix.com
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3. Immediacy
Instant gratification – 24 by 7 convenience, faster way to do everything, simpler, objective interpretations, on demand, information at finger tips
Everything is available at a click, on demand
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4. Nature of Data is Changing
Simpler, visual, aggregated, easily available, greater ability to learn big data, complex data is turned into meaningful bytes easily, businesses using big data, 3D imaging – data is more real
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5. Many in One – The era of more
Multi-tasking, ability to be in many places at once, as geographical distance does not matter, automate tasks, connected devices with one touch control, smart home appliances
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6. Time is the new currency
Time-saved is money saved, improvement in productivity, time efficient technologies, everything is faster than before - automate tasks to save time, smart CRM systems, paper to online, get all data in one place for a meeting to start
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7. Open cultures – less hierarchy, less predefinitions
Roles are not strictly pre-defined, more collaboration, ability to cross-task, functional and organizational hierarchies are disappearing, less formal, social networking, collaboration tools
8. The Workspace of Future
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Fast, Information at a ClickEase of Collaboration
Manual to DigitalSegregated to IntegratedTime consuming to Within minutesIndividual to CollaborativeFormal to FlexibleTextual to VisualCluttered to Simplified
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LEADING TO CHANGE MAJOR CHANGES IN INSURANCE
Expectations: Insurance Innovation
12Source Hype Cycle for P&C Insurance, 2016“, Gartner, June 2016
Expectations: Insurance Analytics
Next 2 to 5 Years• Advanced Analytics Solutions• Insurance Data Models• Agency Portal Solution Digitization• Use of Social Media
Next 5 to 10 Years• Smart Machines• P&C Insurance APP Store• Telematics• Insurance Data Models• Wearables
Expectations: Near and Mid Term
Insurance will be disrupted!
• Internet of Things (IoT)
• Drones, Autonomous Cars,
Telematics
• Big Data & Artificial Intelligence
• Genetics & Wellness
1Smart
Machines
2New Paradigms
3Non Traditional
Competition
• Property/Title centrally registered –
globally (Blockchain)
• New Risks appear, some dissapear
• Switch on/Switch off coverage
• Consumer channels
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• What are core capabilities for future success?• How will you prepare and when do you move?• What impact does it have on your Capital?
• Social Insurance (Crowd sourced)
• Non-Insurance entrants
• Re-Insurers
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HOW WILL ROLE OF THE UNDERWRITER CHANGE?
Evolution: Commercial Insurance Underwriting
Manual Automation
• 2x Underwriting Productivity
• 2% Loss Ratio ↓• 0.5% Expense Ratio ↓
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How underwriters have been traditionally- 70% time spent on low value tasks- Trouble getting information in one place- Swivel chair and integration issues- Challenge comparing data from multiple sources- Communication gaps when collaborating with experts and brokers
Solution: Work Smarter
TECHNOLOGY &BIG DATA REQUIRE RETHINKING YOUR APPROACH 17
WAKE UP!!!18
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Experian, Lexis Nexis, PASCall Credit,Telematics….
Unstructured EXTERNAL
INTERNAL
PAS, Datawarehouse, Claims, Billing…...
Search, Aggregate, Analyse, Visualize and Learn Processes Transformed
1. Case Underwriting
2. Renewal Analysis
3. Portfolio Analysis
4. Data Validation (e.g. Quote information validation, Automated Premium Audit for WC)
5. Form Filling (e.g. Enabling B2C SME Business, Quick quote, etc.)
6. Large Loss Investigation
7. Proactive Marketing
Structured EXTERNAL
The Future of Commercial Underwriting
*Includes machine learning and deep learning
Descriptive AnalyticsWhat is happening
Confirm
Hindsight
AnalyticalTechnique
Outcome
Process
Traditional ApproachForm
TheoryObserve
Data
Diagnostic AnalyticsWhy did it happen
Predictive AnalyticsWhat is likely to
happen
FormTheory
Foresight
New ApproachObserve
Data*Identify
Pattern
Prescriptive AnalyticsWhat should I do
about it
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Commercial Underwriting
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Fundamental: Transformation of Risk Assessment
• Statistically Similar Unique Risk Propensity
Looking Backward Looking Forward
Evolution: Commercial Insurance Underwriting
Manual AssistedAutomation Artificial Intelligence
• 2x Underwriting Productivity
• 2% Loss Ratio ↓• 0.5% Expense Ratio ↓
• 5x Underwriting Productivity
• 5% Loss Ratio ↓• 1 – 2% Expense Ratio ↓
• 10x Productivity• 2x Growth• 10 – 15% NCOR ↓
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• More strategic Understand the big picture about customers and hence predict desirable leads, cross-selling opportunities, messaging
• More innovative Help with product development by defining requirements, pricing frameworks, key trends based on third party data and customer behavior – unique insights
• More customer centricBuild and enable a “team approach” to account servicing via collaborative tools and democratic information access. Leading to better solutions and increased customer loyalty.
• More data savvy Machine learning, AI and big data enable to use analytical approach to improve precision and new kinds of data prediction and predictive modeling.
The Evolving Role of Underwriter
Source : E&Y
Underwriter of tomorrow will straddle multiple roles, beyond the current job predefinitions.
Underwriters of The Future
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Expectations: Insurance Innovation
27Source Hype Cycle for P&C Insurance, 2016“, Gartner, June 2016
Expectations: Insurance Analytics
28Source Hype Cycle for P&C Insurance, 2016“, Gartner, June 2016