McKinsey explores modernising underwriting during COVID-19
While legacy underwriting standards and protocols were already problematic for customers prior to the pandemic, the increasingly complicated logistics affecting many aspects of insurance means that digital solutions are becoming a necessity.
“More than ever, insurance companies must address customer and agent frustration with the still lengthy, high-touch, manual process,” said McKinsey. Indeed, with medical examinations complicated and risk assessments sometimes confined to remote working models, practically all methods of working have in some way been disrupted.
Addressing a lack of ambition
The primary cause for concern, the report posits, is that insurance companies, excepting InsurTechs which thrive on utilising innovative new technology, have fallen behind in adequately adapting for the digital era through hesitancy.
Instead of choosing to completely reimagine their underwriting frameworks or construct a new vision of the process, some companies make small or superficial improvements that have no direct benefit to the customer.
“Especially given the changes brought on by the COVID-19 environment, insurers can no longer afford to be so cautious,” McKinsey continues. It gives the positive example of platform as evidence that increased ambition can pay dividends:
“[eApp] enables an end-to-end digital process across policies of all face values. The company provides instant decisions for applicants up to 60 years old for some products with up to USD$3mn in face value.”
Furthermore, in a sample of eight insurers measured by sales volumes over a two-year period, it was found that a 14% median increase resulted among those who opted to incorporate an optimised digital underwriting process.
Four steps for underwriting modernisation
With the necessity and benefits of modernisation efforts clearly established, McKinsey provides a four-step guide for insurers to base their new underwriting roadmap on:
- Understand and incorporate digital systems: from streamlining data collection to augmenting the decision process, the digitisation of records and the creation of faster product R&D timelines, systems underpin the insurance industry and the proper sequencing of these aspects can produce markedly greater results.
- Eliminate team silos: a team comprised of digitally-equipped talent is not best deployed within rigid departmental structures. Instead, greater flexibility and collaboration should be encouraged to make use of diverse skill sets.
- Aim high: digital transformation isn’t easy and often isn’t cheap either. However, by intelligently planning the journey beforehand and then committing to it wholeheartedly, insurers can expect to see better ROI.
- Keep up the pace: rather than planning marathons on long-term goals, companies should opt for sprint-like short-term objectives which then link together to form larger overall targets. This ensures employee morale is kept high through a sense of achievement while the transformation itself quantifiably expands regularly.
Although McKinsey expects companies who follow its advice to reap tangible benefits from doing so, it also emphasises that “this is only the beginning. Many current efforts to modernise underwriting are only digitally enabling yesterday’s products. Today’s consumers have different preferences and needs than they did several decades ago.
“Streamlined underwriting is the first foundational step that will lead to the broader reinvention the industry needs.”
SLK Software: Optimising performance in the digital economy
Established in 2000 in Bengaluru, India, SLK Software recognises that fast-paced digital transformation is creating an unprecedentedly fertile period of opportunity for global businesses.
As such, with a firm belief in the power of simplification and automation to yield new and exciting experiences, the company has been challenging the status quo for over 20 years through an approach that is:
- Relationship oriented
- Strategically focused on a desired outcome
- Reliant on automation tech
Believing in purposeful automation
SLK’s specialisation in automation tech is full spectrum: artificial intelligence (AI) and machine learning (ML), Computer Vision, Natural Language Processing (NLP), Robotic Process Automation (RPA), and more, are all part of its core competencies.
Citing 90% productivity improvements, 30% business growth through better customer experiences, and up to 20x faster go-to-market capabilities, the reasons for its focus are clear.
The company currently serves the banking, financial services, insurance, retirement services, M&A, manufacturing, and supply chain sectors. Solutions offered include:
- Intelligent Business Transformation
- Agile IT Automation
Accelerating workflow processes
The latter is a tool specifically calibrated to enable business users an easy method for capturing document processes. This can occur across any application, with these individual tasks then seamlessly combined for both improved compliance and governance.
Carol Castelloni, VP of Transformation at CNA Insurance, highlighted this as providing critical support in helping the company meet its business objectives:
“SLK’s Avo Discover tool accelerates how we can document workflow processes, measure impacts on enhancements, and identifies future automation opportunities.” Liberated from having to focus on these process-driven aspects of business, CNA Insurance has been able to refocus its attention on creative problem-solving instead.
Ultimately, this is the most important benefit that SLK brings: it optimises the back end so that clients can channel their energy towards what matters the most, customers.
Read more about SLK Software and CNA Insurance in the June 2021 edition of FinTech Magazine.
Pictured: SLK Software team (source)