A new whitepaper from the Reinsurance Group of America (RGA) says artificial intelligence (AI) is empowering life insurance underwriters already today, in very specific ways, addressing a number of common challenges the profession faces.
The paper also notes, however, that while AI excels at addressing issues many underwriters find frustrating, it does not replace human underwriters in the process.
“AI in life underwriting is not a future concept but a present reality, with 40 per cent of life insurers adopting or planning AI integration, reducing policy issue time from 33 days to 12.5 days, on average,” they write, citing research from Celent. They say the 40 per cent figure is an increase of 28 per cent in one year.
Six major challenges
The six major challenges the paper looks at briefly include data fragmentation, manual processes, evolving risks, fraud detection, customer demands and regulatory compliance.
Entitled How AI Provides Real Solutions to Today’s Underwriting Challenges, the paper then looks more closely at specific solutions being used in each area. “AI is already a powerful tool, solving real underwriting problems,” they write.
“As AI reshapes the process, it is important to remember what remains unchanged: the central role of the human underwriter. Underwriting is ultimately about judgement, ethics, and human-to-human assurance. AI is not about replacing life underwriters; it is about empowering them and further increasing their efficiency.”
Taking over repetitive tasks
For example, the paper points out that traditional life underwriting generally involves manual tasks such as retyping information from PDFs and handwritten notes and reviewing hundreds of pages of medical files, checking off requirements, one by one.
“This is tedious work that delays policy decisions and leads to inconsistencies and mistakes,” they write. “AI and automation tools can take over repetitive tasks – deciphering messy handwriting using optical character recognition, auto-filling application dates and triggering routine decisions.” This clerical work can also be done in seconds.
Underwriting also reportedly struggles to keep up with the influx of emerging risks and data sources, “and the data proliferation is only accelerating.” Even in matters of regulatory compliance, they say there are AI-powered solutions that will check underwriting models for bias and log every step of decision-making processes, creating a record for regulators.
“The very issues that frustrate life underwriters are tasks AI excels at addressing. Every challenge is an opportunity for innovation,” they conclude.
