The insurance industry seems to be highly interested in implementing digital transformation in its various areas to leverage its productivity and overall growth. Hence, the aspects of insurance issuance and claim settlement witness a wide range of technological advancements that are bound to create positive changes in end-user experience. Life insurance underwriting is one such area that needs to be addressed now to create a beneficial future.
Underwriting typically refers to the process of assessing whether you are eligible for life insurance coverage or not and, if approved, what premium amount you will need to pay to the insurer. Thus, life underwriting is a highly crucial yet time-taking process when done manually. Currently, 24 life insurance companies in India face a huge challenge in managing this time-consuming task of life underwriting.
However, the adoption of advanced technologies in the insurance industry is about to improve this situation to a large extent. So, here is how life insurance underwriting works as the torchbearer of transformation in insurance digitalization.
Before looking at how the digital transformation occurs, it is better to have a quick idea about underwriting.
Life insurance underwriting is referred to as an evaluation of a customer’s medical and health history, lifestyle, hobbies, occupation, financial status, etc., which can improve their life expectancy. Based on these risks, insurers determine the optimum premiums for your life insurance.
There are usually two routes that comprise life insurance underwriting. One is traditional underwriting, and the other one is accelerated underwriting. Both these routes will need you to provide your personal details related to your financial and medical history. Also, these paths will make the insurer collect your prescription history and your motor vehicle report.
While the traditional route includes medical exams, the accelerated one might skip it using advanced techniques and tools to predict relative mortality rate. So, it is the latter route in which digitalization comes into the roleplay.
The way life insurers perform the underwriting process is changing rapidly with the implementation of advanced technologies. So, have a look at how digital transformation is bringing about this influential change.
India’s share in the world’s life insurance market was near the mark of 2.73% during 2019. So, to increase this percentage, many technologies have been adopted in the industry. AI is one of them. The implementation of Artificial Intelligence or AI has impeccable prospects in the world of underwriting.
AI-driven systems can easily update analysis in automatic underwriting as soon as the new data is available. Offering better data insights can facilitate optimum risk management and create more accurate recommendations for effective decision-making.
The application of AI systems in disease management and assessment of insurability of people after impairment can minimize time consumption in suitable product recommendations to customers.
Apart from the traditional or full route of underwriting, the accelerated route witnesses more improvements with streamlined technologies. There is a vast scope of growth in therapeutic and prognostics technologies in the insurance sector.
Massive medical improvements are occurring today with effective monitoring apps or invasive/non-invasive sensors, which help improve human life expectancy. If any policyholder consistently uses such apps to enhance their therapy compliance for various diseases, it will facilitate a quick underwriting process, adding value to the entire insurance.
The advancement in insurance technologies includes effective data analysis. The implementation of various data analytics tools can enable quick real-time adaptation of the underwriting guidelines, enhancing the claims experience of end-users.
Besides, the inclusion of predictive analytics and self-learning algorithms for more robust and accurate data analysis will be built upon such valuable data, comprehensively improving the entire sector.
The world of insurance is not in a mood to set back from time-to-time improvements. And the digital transformation of the underwriting process is a burning proof of this fact. The gradual implementation of digitization in life insurance underwriting will set a new trend, powerfully creating a robust future for the insurance sector.