Entering the digital era: the transformation of underwriting
Underwriting, the cornerstone of the insurance industry, relies heavily on the expertise of individual specialists. Underwriters, especially in speciality insurance, often create tailored solutions for complex, large contracts. However, this traditional approach presents a valuable opportunity for digital transformation and innovation.
Digitization as the key to underwriting evolution
The emergence of advanced technology presents a significant opportunity for the evolution of underwriting practices. Digitisation, particularly through the implementation of underwriting workbenches, has already improved underwriting quality and further professionalised the underwriter’s role. An underwriting workbench is a digital platform that uses automation and AI to streamline the insurance underwriting process by centralising data, enhancing risk assessment and supporting better decision-making. Furthermore, it is crucial for enhancing consistency and transparency within insurance organizations, ensuring a more standardised and reliable approach to risk assessment and pricing. Additionally, improved reporting capabilities enable more informed management decisions, supporting strategic planning and operational efficiency.
On the road to digital transformation
The journey toward digital transformation in underwriting is not without its obstacles. Insurers face numerous challenges, including legacy systems that pose integration difficulties and hinder the adoption of new technologies. Inefficiencies resulting from manual data entry and fragmented workflows, along with data silos that prevent a holistic view of risk, contribute to high operational costs and a lack of automation.
Landscape of solutions supporting underwriting transformation
To address these challenges, Sollers is currently supporting London Market insurers in implementing several underwriting workbenches. These initiatives aim to improve the digital work environment, which can often be impacted by legacy systems, fragmented platforms, and complex workflows that manage data from multiple sources.
A well-designed underwriting workbench addresses these issues by automating data acquisition from multiple channels, utilizing AI-driven extraction and data standardization, and enriching data in real-time through integrations with external entities. It also centralizes the entire process in one place, allowing all parties to monitor the status of individual items while maintaining a comprehensive view of all submissions being processed.
The solutions available in the market are often based on flexible and scalable platforms such as Appian or Salesforce, which allow the development of customised solutions tailored to the specific needs of individual insurers. There is also a group of off-the-shelf platforms, such as Send or Optalitix, that offer a rich set of key OOTB capabilities that address the needs of specialty insurers in specific markets. What's more, key core platform vendors such as Guidewire see a growing need among their customers and are building the required capabilities or strategic alliances with key workbench vendors.
Objectives of underwriting workbench implementation
While underwriting workbench implementations are often multi-faceted, with each insurer and underwriter having its own needs and requirements, Sollers identifies the following key objectives:
Underwriting digitization: benefits and challenges
By aggregating and transforming data from various sources, UWWBs provide underwriters with a structured view of risk, including real-time insights from external providers, enabling faster and more accurate decision-making. Additionally, they enhance the tracking of key underwriting metrics, providing deeper visibility into portfolio performance and profitability.
Despite significant benefits, implementing underwriting workbench is not without challenges. These projects are innovative and require specialised expertise in insurance domain knowledge, process optimisation and automation. Implementing an effective underwriting workbench involves navigating the complexities of integrating it with policy administration systems (PAS), as underwriting processes are typically collaborative and capabilities are shared between the two. Success depends on a deep understanding of underwriting workflows and seamless coordination between the workbench and PAS to ensure efficiency and accuracy.
Other difficulties in implementing underwriting workbenches often stem from legacy system constraints, data quality issues, and a lack of clear vision for process transformation. While workbenches are designed to handle complex workflows and API integrations effectively, ensuring seamless adoption requires strong business alignment and iterative refinements. However, compared to large-scale system overhauls like policy administration system (PAS) implementations, workbench deployments are significantly faster, typically measured in weeks or months rather than years.
The role of artificial intelligence in modern underwriting
Artificial intelligence (AI) in underwriting is rapidly evolving. While automation tools have been available for some time, the emergence of large language models (LLMs) and natural language processing (NLP) enables significant advancements, in commercial underwriting. By processing more data than ever before, AI can now extract, interpret and summarise voluminous policy documents, perform semantic and logical analysis of policy wording, and assist underwriters in risk assessment.
The future of underwriting – key development directions
Looking ahead, underwriting is likely to be characterised by:
Conclusion
While underwriting has traditionally relied on specialized expertise and manual processes, the need for digitisation is becoming increasingly critical for insurers to remain competitive. Underwriting workbenches, supported by experienced partners, offer a pathway to overcoming existing pain points, increasing efficiency, improving risk assessment, and ultimately transforming the underwriting function in the digital era.
The integration of AI further strengthens these benefits, paving the way for a future where underwriting is faster, more accurate, and more strategic.
Jakub Wróblewski , UK London Market Lead at Sollers Consulting
Jakub Śliwiński , Head of Underwriting at Sollers Consulting
Technology in Insurance: Facts and Comments
Beth Musselwhite from Reinsurancenews, Okan Meese from Versicherungsmonitor and Kenneth Araullo from Insurance Business report about the new cooperation between Sollers and Duck Creek Reinsurance:
“The Duck Creek software is designed to better prepare insurers for discussions with reinsurers. To this end, the cloud solution collects and analyses primary insurer data from areas such as claims management, policy administration, business development and risk exposure.”
Reinsurance is going through a difficult time as increased frequency and intensity of NatCat events has made reinsurance purchasing much more difficult. We are very pleased to be working with Duck Creek to help insurance companies respond. Duck Creek Reinsurance offers a powerful solution. Our experience with complex system integrations in the insurance industry makes us confident that reinsurance management will take a significant step towards digitalisation.
Krzysztof Biernat , UK London Market Lead at Sollers Consulting
During her presentation for the year 2024 Aviva-CEO Amanda Blanc highlighted:
“70% of UK Private Line business is underwritten with machine learning”
Aviva is investing heavily in its data management capabilities, with a third of all vacant IT roles focused on data science, data engineering, data modelling and data governance to support machine learning and AI. The acquisition of Direct Line Group would allow Aviva to manage and utilise an even greater amount of data, and the company needs to be prepared for this. The company is committed to staying at the forefront and focussing on the key enablers for AI.
Aleksander Czarnołęski , Head of UK GI at Sollers Consulting
Figure of the Month
*Return on Equity (ROE) achieved by the UK insurer Admiral in 2024, supported by early adoption of new technologies while the average ROE of the leading market players is at 16%
Partner at Sollers Consulting
5moWe can see similar challenges in UW processes for the corporate and SME business lines. Hence, the approach and solution apply not only to the London Market but also to the general insurance players. Many insurers in Poland and CEE are testing or already implementing elements of the UW automation.
Product Delivery & Digital Solutions
5moThe future looks bright! With an Underwriting Workbench as a centralised point of data the business can now understand what they are missing on, knowing what are they not writing and why creates opportunities to remain competitive.
"Digitisation, particularly through the implementation of underwriting workbenches, has already improved underwriting quality" how you measure improvement in the underwriting quality?
"Sapere aude!"
5moCan you refresh underwriting by simply building a new underwriting workbench on top of all your existing systems and data? Jakub Śliwiński is it that easy?
Head of Sales & Delivery - the Nordic Countries || Sollers
5moDigitalizing underwriting is becoming a low hanging fruit - tools are proven and ready, market expertise is here as well. It's a good moment to consider it.