A recent survey of insurance underwriters found that 40 percent of their time is spent on “tasks that are not core” to underwriting. The top three reasons they cited are:
- Redundant inputs/manual processes;
- Outdated/inflexible systems; and
- Lack of information/analytics at the point of need.
The survey – conducted by The Institutes and Accenture – also found that underwriting quality processes and tools are at their lowest point since the survey was first conducted in 2008. Only 46 percent of the 434 underwriters who responded said they believe their frontline underwriting practices are “superior” – which is down 17 percent from 2013.
“While underwriters believe technology changes have improved underwriting performance, 64 percent said their workload has increased or had no change with technology investments,” Christopher McDaniel, president at The Institutes RiskStream Group, told attendees at Triple-I’s Joint Industry Forum.
The survey’s findings with respect to talent may shed some light on this. The number of organizations viewed as having “superior” talent management capabilities for underwriting fell 50 percent since 2013 across almost every measure of performance evaluated.
“Training, recruiting, and retention planning had some of the biggest drops, particularly for personal lines,” McDaniel said. About a quarter of personal lines underwriters said they view their company’s talent management programs as deficient. That rate rose to 41 percent for talent retention; 37 percent for in succession planning; 33 percent for in training; and 30 percent for recruiting
“While technology investment may have improved underwriting performance” in terms of risk evaluation, quoting, and selling, McDaniel said those improvements “appear to have come at the expense of training and retaining underwriting talent,” McDaniel said.
Even before the pandemic and “the great resignation,” insurance faced a talent gap. Part of the challenge has been finding replacements for a rapidly retiring workforce, as the median age of insurance company employees is higher than in other financial sectors.
A McKinsey study that assessed the potential impact of automation on functions like underwriting, actuarial, claims, finance, and operations at U.S and European companies found that as underwriting becomes more technical in nature it also will require more social skills and flexibility. Respondents to the McKinsey survey said automation and analytics-driven processes will produce a greater need for “soft skills” to shape and interpret quantitative outputs. Adaptability will also become more important for underwriters to stay responsive to changing risks and learn new techniques as technology changes.
“Underwriters will not become programmers themselves,” the McKinsey report said, “but they will work extensively with colleagues in newer digital and data-focused roles to develop and manage underwriting solutions.”
Technology Stocks to Invest In
NetApp (Nasdaq: NTAP) develops cloud hardware that assists customers in building and running applications on Google Cloud with efficient capabilities. As a Fortune 500 company, NTAP provides cloud and data management services to more than 30 leading enterprises in the oil and gas industry, the life sciences field, and the media and entertainment field.
Seagate Technology (Nasdaq: STX) provides cloud hardware as a U.S.-based data storage company. STX has earned a reputation as the “world’s second-largest maker of hard disk drives” and other storage products. Some of the biggest names in cloud infrastructure appear on the company’s client list, including Amazon, Google, Apple and Facebook. The increasing demand for cloud computing hardware may give investors some ideas for what to invest in in 2020.
Splunk (Nasdaq: SPLK) “turns data into strategy” by making it accessible to users within organizations. The SPLK software identifies data patterns, diagnoses problems and generates intelligence. The management of digital data creates a “top priority” for enterprises that may accumulate 44 times more data in 2020 than in the past decade. The company experienced double-digit growth in 2018 as companies struggled to interpret massive amounts of data. Software as a service (SaaS) provides a specialty for companies that profit from the sale of cloud-based software. The Motley Fool cites two market-leading SaaS enterprises whose customer relationship or customer support platforms require payment of recurring fees.
Salesforce.com (NYSE: CRM) experienced “extraordinary revenue growth,” with a climb of 25% in its most recently reported quarters year over year.
Zendesk (NYSE: ZEN), a customer service platform, produced even better results, with a 39% climb during the same period. In the field of robotics, rapidly improving technologies provide opportunities for artificial intelligence companies and enterprises that focus on machine learning, the Internet of Things and semiconductors.
Intuitive Surgical (NASDAQ: ISRG) developed the minimally invasive surgical robot da Vinci. The company saw remarkable 20% year-over-year revenue growth in Q2.
iRobot (NASDAQ: IRBT) makes the product that investors may recognize as an innovation from the manufacturer of the Roomba robotic vacuum. The company performed a little better than Intuitive Surgical, with 24% growth during the same period.