An increased adoption of technology is apparent in life insurance underwriting

Monday 26 August 2013, Amsterdam

The life insurance segment is characterized by underwriting losses in some developed nations, and underwriting profits in important emerging economies such as China, India, Brazil and Russia. The losses in developed nations are due to a growth in premiums not keeping pace with increases in claims, whilst the profits in emerging economies are due to rising earned premiums on account of growth in under-penetrated life markets, and rising disposable incomes.

Globally, the life segment is in a state of flux due to far-reaching regulations such as Solvency II in Europe. These regulations essentially link the amount of capital held by life insurers with the risks they underwrite and the investments they make. Life insurers will be reducing their investments in equities due to the increased risks involved and the increased capital required. Another regulation impacting the life segment in the EU is the prohibition of the use of gender to determine premiums which is expected to increase overall premium rates.


This report offers:
•    A global snapshot of the life underwriting market dynamics including, loss ratios, expense ratios, combined ratios, profit and loss trends, etc.
•    An insight into the effects of regulations on life insurance underwriting which includes, the impact on life insurance product offering, the impact on key functional and operational elements and the impact on investment strategy by asset class (equities, property, bonds, etc).
•    A breakdown of the market dynamics related to economic risk.
•    A look into an assortment of technological trends in underwriting such as customer profiles, automations, social media and Big Data.

This will facilitate:
•    The increasing of your knowledge of the factors affecting the life insurance underwriting industry.
•    Your understanding of the regulations introduced and how they affect the industry.
•    A clear understanding of market opportunities and entry strategies to gain or grow your market share in the cyber liability insurance industry in the UK.
•    A greater understanding of the technological trends in the underwriting industry.
 

Growing use of technology in life insurance underwriting processes
An increased adoption of technology is apparent in life insurance underwriting due to the need to improve customer service. This came as a result of increased competition, reduced operating costs and reduced losses from false claims and misrepresentations. The three key technological areas assuming increased importance are automation, the use of social media and predictive modeling.

Three key technological areas
Automation is being employed to underwrite risks where simple criteria templates will suffice, to enable the quick processing of numerous applications. Automation is also being used to speed up claim processing and, as a result, retain customer loyalty. Social media is mainly being used to gauge the risk profiles of individuals based on information they give on their profiles. The scanning of social networks is also being used to gauge discrepancies in claims made by individuals and the information they disclose online, to avoid losses due to incorrect risk assessment and false claims. Predictive modeling is another tool, which incorporates several variables into a statistical model and uses analytics to forecast mortality. This will reduce expenses incurred in underwriting and speed up application processes.

Alternate mechanisms employed to profile customers
Increasingly, life insurers, especially in developed nations, are not depending solely on biomedical tests to assess customer risks. They are also analyzing social media conversations, purchases and their financial status, using information from data aggregators.