The Benefits of Automated Insurance Underwriting


Too many insurance companies have failed consumers the world over. Consumer expectations for simplified processes and customized services are not being met.

Insurance customers expect to quickly receive a personalized and affordable policy from their carriers.  

And yet, the insurance industry is lagging behind, mired in time-draining processes. Many incumbent insurers are losing customers simply because they are using outdated technology.

What’s worrying is that the place where most insurance companies fail is at the very beginning — during the underwriting process.

The Underwriting Process in the Insurance Industry

Underwriting is the process of gathering a customer’s personal data and determining how much coverage to provide and at what rate. To make this decision, the underwriter looks at data, stats, and regulations. These are only some of the factors that are considered:

  • Occupation
  • Income and assets owned
  • Medical conditions
  • Family medical history
  • Lifestyle choices

Insurance underwriters then assess the amount of risk the client brings to the insurance company and sets an appropriate price for the policy.

The challenge insurers face today is that underwriters are often overwhelmed by the sheer number of applications that need to be processed. As a result, insurance companies are not able to respond in a timely manner, which leaves customers frustrated and going elsewhere.

underwriting automation

Therefore, insurers need to find a way of streamlining underwriting processes, while strictly following regulatory requirements.

And they need to do this quickly because tech-savvy insurtechs are using sophisticated underwriting systems to enhance their tasks and capture market share.  

Meeting customer expectations today relies on optimizing the underwriting process — insurers need to adapt their underwriting processes to meet today’s needs.

Therefore, the way forward for the insurance industry is to use automated underwriting software to bring innovation to the underwriting process. Find out how automation empowers underwriters and creates more value for the insurance industry.

The Automated Insurance Underwriting Model Explained

Automated underwriting uses advanced software instead of human underwriters to carry out underwriting processes. As a result, risk assessments are performed more accurately in a fraction of the time it currently takes.

Automation simplifies the underwriting process, leading to more consistent decisions and faster time to market.

Automated Insurance Underwriting vs Manual Insurance Underwriting

While automated insurance underwriting efficiently calculates the risk a customer poses, manual insurance underwriting is the complete opposite. Manual insurance underwriting takes much longer to finish because it’s performed by a human underwriter.

The underwriter has to sift through countless documents in order to calculate the risk of providing insurance to the applicant.

As a result, the entire process, which includes data aggregation and data processing, may even take weeks to complete. This traditional approach to underwriting is not only time-consuming but could lead to incorrect risk assessments due to human error.

However, that’s not to say that there isn’t room for manual underwriting.

The Value of Manual Processing

Every client is different and there are applications that require the attention of experienced underwriters. For instance, in cases with contradictory medical data or where information is incomplete.

While manual insurance underwriting is a necessity for unique cases, it presents a drain on insurers’ resources.

This is why insurance companies are adopting automated underwriting to quickly advance qualified candidates while leaving complex cases to human underwriters.

Benefits of Automated Insurance Underwriting

Automated underwriting platforms perform the same process as manual underwriters. However, there are several impactful advantages to using automated insurance underwriting.

Automation streamlines the first phase of the underwriting process. Automated insurance underwriting assesses an application and flags elements that must be reviewed by an underwriter.

Since there is little input from a human underwriter, automated insurance underwriting eliminates mistakes. Once the automation platform has all the correct information, then it will produce an accurate risk assessment. There’s no fear of things like transposition errors or missing relevant data.

Automated Underwriting For An Accelerated Process

Automated insurance underwriting needs only a few minutes to complete a risk assessment and have it reviewed by an underwriter. In straightforward cases, the automated underwriting software arrives at a decision on its own.

automated underwriting software

As a result, insurers can dramatically improve their customer experience by offering immediate coverage at lower prices.

This also gives insurance companies the ability to use their resources to invest in highly personalized product development and expand into new markets. Therefore, automated insurance underwriting is one of the main drivers of sustainable growth for insurers.

Insurance companies are experimenting with new technology, such as artificial intelligence and machine learning to automate their underwriting processes. However, only business rules engines have a proven track record in the industry.

What Rules-Based Automation Can Do For The Insurance Industry

Business rules engines automate complex and time-consuming tasks, allowing underwriters to focus on cases that need more research and professional expertise.

Higson is a business rules engine used by leading insurance carriers to boost productivity and meet customer expectations. It is a zero-code platform that places underwriting processes in the hands of underwriting managers. There’s no need to get the IT department involved, allowing insurers to respond to changing market conditions and regulatory requirements in real-time.

Underwriting Transformation with Higson

So, using Higson to automate underwriting processes, insurance companies can:

  • Attract new clients with a quick application process that gives quotes in record time
  • Develop innovative insurance policies in real-time at competitive prices
  • Boost productivity of their underwriters

Since consumers expect services to adapt to their personal needs and circumstances, insurers need to make underwriting rules responsive to new data. For example, in auto insurance, if a customer’s driving improved over time, then the insurer might lower the price of the policy.

Higson’s user-friendly interface gives insurance providers a bird’s-eye view of underwriting processes, enabling collaboration from team members across the company. To further ensure that all underwriting decisions are consistent and accurate, Hyperon relies on central decision configuration.

This means that insurers don’t have to worry about duplicate or contradictory information.

Higson speeds up the underwriting process while reducing underwriting costs and errors, and optimizing the customer experience.

If you’d like to see how Higson can automate your underwriting processes, then sign up for a free trial. Higson is FREE for development use. You can download it, configure it, and test out its abilities in the development environment without making any financial commitments.

Get a personalized evaluation of Higson's potential for your use case
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