"While technology can process data on an unprecedented scale, the ability of humans to ask the right questions, analyse complex scenarios and apply judgment cannot be replicated by robots."
In today’s digital age, data and technology are transforming traditional underwriting and risk assessment practices. Rapidly evolving Artificial Intelligence (AI) and machine learning solutions are fundamentally reshaping how re/insurers evaluate potential risks, giving underwriters access to an unprecedented wealth of information and insights.
Critically, these technologies are enabling companies to analyse vast amounts of real-time data from diverse sources, allowing for deeper understanding, and more accurate pricing of risk. However, the future of underwriting shouldn’t be driven by technology alone. As automation and data-driven tools handle more traditional tasks, the demand for new skill sets will grow, reshaping career paths in the field.
“Underwriters will need to get more comfortable with filtering relevant information, remaining curious about risk-relevant information and be able to make sense of patterns seen in the data.”
Within this context, the human intelligence that underwriters bring to the table will remain crucial. While technology can process data on an unprecedented scale, the ability of humans to ask the right questions, analyse complex scenarios and apply judgment cannot be replicated by robots.
Curiosity and critical thinking will become more important than ever, helping underwriters to direct the use of technology towards those areas in which it offers the greatest value. By combining those all-important human qualities with the efficiency benefits offered by automation, we can enhance decision-making processes, improve accuracy, and ultimately drive better outcomes.
Of course, there are several examples of what this combination could look like in practice. In leveraging large language models, insurers no longer need to wait for claims to land. Instead, in the case of insurance events, they can instantly assess how many treaties are expected to be triggered, their limits, possible waiting periods, and types of exposure. Similarly, in risk and treaty assessments, AI-driven algorithms can quickly summarise ‘what-if’ scenarios defined by underwriters, offering insights into evolving risks that were difficult to quantify just a few years ago.
“In this sense, when managed effectively, technology can unlock new solutions and enhance portfolio steering & risk selection. However, achieving these merits largely depends on underwriters understanding the limits of this evolving technology.”
Human oversight and judgment are essential to ensure that technology serves as a tool, not a replacement, in making informed and balanced decisions. We must not forget that technology (at least in its current state) continues to be limited. AI hallucinations that fabricate information are a real problem that can deliver false information, potentially leading to poor underwriting decisions and liability claims. Equally, the issue of biases can lead to repetitive poor decisions.
Conversely, the merits of a human-led approach supplemented by technology remain incredibly strong. At its core, our business is about investing in people’s ideas. If an insurer wants to restructure a portfolio to enhance its performance, then human conversations are needed to truly understand the intentions, and how they can be helped with capacity or alternative solutions. This is what the fundamentals of holistic underwriting are all about going the extra mile to take a 360 approach to understanding the risk.
Rather than solely focusing on the specific details of one-off transactions, other key factors such as the insurer’s needs and motivations, as well as market trends and macroeconomic conditions, should also be considered. In this way, a more strategic, comprehensive evaluation that is enriched by rounded perspectives can be achieved. With human input, risk decisions can be in part guided by aspects such as long-term client value and future opportunities, rather than relying on a relatively linear, cost-driven, risk-averse approach.
“In the same vein, we need to ensure that technology is guided by human experience to reap the most effective rewards. So, how can that be achieved?”
At Swiss Re, technology is already enabling us to more accurately use forward-looking models rather than solely relying on historical data. Through our natural catastrophe risk assessment platform CatNet®, for example, we’re able to accurately forecast wildfire risks, amongst other perils.
In the claims space, we’re leveraging our proprietary natural catastrophe models, satellite imagery, weather and property data, and augmenting it with AI algorithms in our Rapid Damage Assessment tool to determine damage at every insured property level. During Hurricane Ian, the platform provided clients with insights into the insurance policies that could be triggered by property damage, helping them with reserving, planning loss adjustment, and allocating claims resources.
“Further, technology is also driving more informed discussions based on a better understanding of risks that can facilitate ways to mitigate risk and develop innovative solutions.”
However, fundamentally, I believe that the biggest opportunity is to use an aggregated global view on risk to deliver unique insights for insurers, enabling them to better navigate risks and/or identify areas for growth.
The true value of data and claims information lies in its capacity to inform underwriting strategies, shape risk appetites, and identify necessary adjustments for competitiveness and profitability. In this sense, while data and technology can rapidly analyse vast datasets to uncover insights that were once out of reach, the real magic occurs when AI is complemented by the curiosity and expertise of underwriters.
It is, therefore, crucial that we remain focused on the importance of human input in the underwriting process. Undoubtedly, this is the backbone of the re/insurance industry and is essential for fostering loyalty and building trusted partnerships.
