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Underwriting: Yesterday, Today and Tomorrow

By Paul Miller, Vice President & Chief Data Officer, Nationwide

Paul Miller, Vice President & Chief Data Officer, Nationwide

How has the underwriting solutions space evolved over the years?

Underwriting solutions have been evolving for many years. It began with the trend of creating paper applications in electronic formats. Electronic applications added an immense amount of value for everyone. Today, we’ve moved beyond creating the legacy paper applications in an electronic form, to creating more interactive, online applications, and are rapidly moving toward getting answers for the applications while they are online. The industry has evolved to a point where in some cases, one can apply online – either for themselves or as an agent, on behalf of a client–and get offers for policies after answering a few questions.

"The real-time need for ‘speed to decision’ will pave an entirely new way for underwriting processes"

What are the current market trends you see shaping the underwriting solutions space?

The biggest trend shaping the landscape for the near future is having rapid underwriting decisions made online. Future buyers will demand real-time decisions. My focus is on predicting the needs of the agents and buyers of the future and working within the regulatory environment to best meet those needs. To me, the real-time need for “speed to decision” has already paved and will continue to pave an entirely new way for underwriting processes. To achieve success and be more competitive, adjusted underwriting approaches and solutions are imperative.

Can you elaborate on the challenges that organizations face in modernizing their tools and infrastructure?

Most insurers have legacy systems–tools and data from systems going back years or even decades. Creating interfaces between these systems and more modern technologies is a particular challenge, as well as an opportunity for solutions providers who can make this alignment work. Often, this is where new technologies and solutions meet roadblocks when they’re being implemented in an organization. Technology is evolving at such a pace that someone can get a new phone with entirely new features within six months of getting their previous one. But for organizations like life insurers that can carry products and data on their books for 50-plus years, aligning current technological trends and applications with their existing technologies for processing their business is a pain point, as is maintaining those new systems once they’re installed.

"The real-time need for ‘speed to decision’ will pave an entirely new way for underwriting processes"

What might be the major concernsfor organizational CIOs at this point?

Two concerns are the cost to implement and upgrade systems, and the cost to secure technical talent to maintain old and new systems. These costs are critical factors that CIOs have to keep an eye on. Organizations have to modernize systems that don’t mesh well with the current technologies. The focus has to be “what do I use, how should I use it, and how does it fit into my environment?” However, CIOs have to consider the direct and indirect costs associated with application modernization. For instance, should they migrate all the organization’s old systems on to newer platforms? Well, that would be a costly endeavor for both implementation, as well as training the workforce to use the platform. CIOs also have to think about the costs of securing the brightest and best technical talent to manage the systems they’re upgrading.

Do you see an unmet need in the underwriting solutions space that is yet to be addressed by vendors?

I would term “unmet needs” as opportunities. One example is the growing focus on Electronic Health Record (EHR) environments to speed processing on risk assessments. This is being addressed, but with limited success. A vendor who can attain interfacing into EHR environments as soon as possible, at a reasonable cost, then maintain these connections for industry end users, will have strong business growth opportunities. This is definitely a huge opportunity to support any company out there that requires medical underwriting.

Data analytics in general is an important area continuing to develop across the industry. How well do we know our data? An opportunity exists for many companies to enhance their data mining and move their data into structured data elements to improve their knowledge of past business, define current and past trends, and predict future results confidently for policyholders and stockholders. Essentially, speed to decision can be enhanced and streamlined, improving confidence for the benefit of the entire industry.

What disruptions and transformations do you see coming in the next few years?

From a roadmap perspective, I would encourage organizations to adopt electronic workflow processing platforms and consider automatic underwriting platforms. Artificial Intelligence (AI) is an up-and-coming technology in the industry and watching future development of it can translate to success. We’re starting to see an environment where simpler decisions are being made with more automation, using data. That frees up our workforce to work on a greater number of more complex, bigger cases. Having said that, can a machine underwrite a case completely? There’s a lot of work at various levels to examine this question -- the right system of decision-making, business rules, and processing capabilities could underwrite a case completely. Yet, will a machine be able to do so with all cases, at least to a significant extent? We don’t know that yet, but I think electronic processing will have broader capabilities than it does today.

What is your advice for budding technologists in the underwriting solutions space?

My advice would be that an application must be easy to use, intuitive, robust, and agile enough to adapt and change with the industry. The focus should be on the speed of processing and data collection. So my recommendation is that if companies start focusing on these factors, then great solutions can be implemented in the underwriting arena for life, health and other areas of insurance.

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