Apprenticeship Levy, Data Analytics

Insurance sector focus: Do your Underwriters have the Data skills to succeed?

20 August 2021 by Heidi Marshall

Written by Sara Bresler, Client Director at Corndel

Underwriters need to adapt their analytical and problem-solving skills for a world driven by data. In recognition of this, forward-looking L&D teams at insurance firms are increasingly focusing talent strategies around digital skills development for their valued employees.   

For many industries, the huge amount of data available is a game-changer, providing deeper insights and opportunities for businesses to understand their customer-base and grow. The insurance sector is no different. Data is now the lifeblood of the insurance industry and access to new data sources and external data is changing the way organisations assess customers’ risk and pricing policies. This is expected to increase over the next three years (Deloitte, 2020) and beyond. 

Industry disruption  

The insurance industry is ripe for innovation and disruption, as demonstrated by the rise in InsurTech companies and investments by venture capitalists in this space. For Talent professionals, it’s essential to be one step ahead and to predict future skills requirements.  

To compete effectively against InsurTechs, traditional incumbents must respond to the changing market: they must reinvent and modernise how they use these new data sources through investing in their workforce and providing them with the knowledge to employ innovative toolkits to deliver their analysis.   

New skills for underwriters; new challenges for L&D teams 

Underwriters are being challenged to move from hindsight, where their decisions are evaluated after the fact, to foresightActive portfolio management and ongoing monitoring allows underwriters to understand the impact of risks added to their books in real-time. It’s a significant industry shift and a big ask for those who are not trained data analysts.  

Active monitoring can mean insurers are able to more accurately predict issues and work towards outperformance. Having solid data skills such as handling data securely and safelyusing data to identify key risks and communicating data-driven recommendations and decisions to others means underwriters can accurately and efficiently perform deep dives into data and are able to more accurately predict issues and work towards outperformance. 

Take Cyber Insurance, where threat actors are constantly evolving their tools and techniques, making hindsight underwriting less than reliable. Insurers are making inroads with open insurance data sharing models and, although there is still much more that can be done across the industry,  there is no doubt that the ability to confidently perform quantatitive analysis supports better forecasting and risk management.

Data-driven principles and techniques allow insurance companies to streamline their existing processes and are meant to complement their existing workflow. Human judgment and expertise will always be required to accurately price risk in line with a company's business strategy. However, in addition to that expertise, there are a broad range of cutting edge Data Analytics tools that Cyber Insurance can employ to help the Underwriter to develop adequate pricing and risk management models, as well as derive meaning and insights from large historic datasets. 

Meanwhile, the customer’s world is becoming more digital and the widespread availability of alternative and predictive data is increasing. 77% of insurers say that improving customer experience is a significant motivator for their Digital Transformation efforts (Celent). 

The reliance on underwriting expertise diminishes as risk selection becomes increasingly competitive and facilitates more rapid adjustments to underwriting strategies. With these changes, and increased adoption of new tools and emerging technologies, insurance professionals are often concerned that their employers will use these technologies as a way to replace them, resulting in fears about job security and the thought that robots will eventually take precedence. For many, the rise of automation in the workplace sounds alarm bells. 

We recognise that the insurance industry is experiencing disruption through automation and increased digitisation, and the role of the underwriter is evolving as a result. However, automation is a steady process, and instead of replacing entire roles, the majority of jobs willonly experience a replacement of certain tasks.  

Accenture predicts that 8% of an underwriter’s tasks will be automated by 2025. While it’s true that the roles of underwriters are likely to change as a result of new data and technology, the buck will still stop at the underwriter’s desk. You can never underestimate the power of an informed/educated human interpretation of data and there are significant opportunities for Underwriters, supported by their L&D teams and business leaders, to develop new skills that will future proof their careers and unlock new possibilities for their organisations. 

“Providing the underwriter embraces these new technologies and develops the necessary skills to operate in an increasingly technical environment, their future will be secure.” Accenture 

Data skills underpinning the future of underwriting 

Business-critical data skills can be the difference between extracting value from the massive amounts of data that insurance firms hold and letting it go to waste. Equally, appropriate data analysis skills can be the difference between securing the future success of your underwriting function and losing your competitive edge. 
Rather than being displaced by automation, underwriters can ensure job security and even enhance their value by gaining new, sought-after skills. Ultimately, underwriting requires human judgement and combining this with the needs of the 21st century gives you a competitive edge.  

As machine learning, virtual reality, and other digital advances increasingly automate the underwriting function, more successful underwriters can take advantage of technology and newly developed skill sets to become more valuable to both their clients and employers. Leveraging real-time dataindustry insights, and market-sensing capabilities, they could be better equipped to not just help customers manage risk, but also provide insight on how to avoid and prevent exposures. 

Success in the transformation journey and underwriting modernisation is likely to hinge on upgrading four major areas in tandem: Data and Analytics; Strategy & Governance; Technology; Culture and Talent.

An underwriter’s view 

Having worked at LV= GI for more than ten years, Craig Dunne explains how big data has changed the sector. “When I started working in insurance, there was limited data. We only had access to one-way data such as sales figures and claims. Over the years, that has been transformed by the availability of data enrichments from third parties. My interest in data science has grown with that evolution.”  

LV= work with Corndel to grow their own data talent. The first Level 4 Data Analytics programme launched in January 2020, supporting LV=’s desire to keep pace with data innovation; a key part of their business success. 

If you are interested in offering Data skills training to your Underwriters, please get in touch. Accredited programmes are available through the Apprenticeship Levy. 

Sara Bresler's next article will look at the challenges facing the insurance sector from a diversity perspective, and how to diversify your workforce to be more representative of your clients. 

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