Why is there so little personal lines insurance carrier investment in underwriting automation? After all, matching risk to rate is the fundamental driver of insurance economics. Several reasons:
Uncertainty about the benefits – the natural assumption is that there are ‘big up-front costs’ to building risk selection capabilities: will they pay off?
This is because carriers historically have made these changes in their hard to change core systems.
And change is risky because it is manipulating the customer experience at PoS – Actions taken can damage distribution relationships and large resource requirements mean long time lags that make it difficult to respond to channel issues quickly
The difficulty and expense in finding and resolving risks means that most carriers have developed surprisingly little expertise in key risk selection techniques such as rule and intervention building, value estimation, and risk segmentation.
The response that we commonly hear is “We know there are opportunities, we just don’t know how to get at them efficiently. But we know that it can be done because Progressive is doing it. And by doing so is achieving vastly better underwriting results than the rest of the industry.”
It’s quite a dilemma. And we have a solution: do it outside of your core systems with a real time, user composable, ai-enhanced risk selection, detection and resolution solution: idFusionTM
