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The digital revolution – how underwriting is changing to support the mobile sales process

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In this article, from guest author Glen Holmes, the role and design of automated underwriting tools are explored.

Editorial Comment from The Digital Insurer

As insurers start to get customer and distribution centric pre-sales tools in place they will start to look at how to optimise the process and perform as much of the underwriting process online as is possible. Automated underwriting tools, the subject of this article from Munich Re Automation Solutions, provide insurers with the expert tools to allow them to achieve this. Furthermore, these tools can also be used internally to help improve the current manual underwriting process – and to prepare underwriting teams for a more automated future.

The mobile advisor is arriving quickly – just in time to meet client demand

There has been much discussion in the insurance industry around how digital tools and the rapid growth of online purchasing will result in a seismic change in how life insurance is purchased.  The adoption of mobile devices such as laptops, smartphones and tablet computers has led to the creation of an instant-access society where inhabitants demand to purchase whatever and whenever they like.

What is often overlooked is the huge change in how insurers will sell life insurance in the future.  The proliferation of these devices presents huge opportunities to reduce the sales cycle and enhance the customer experience of purchasing life insurance.  It also provides a fantastic platform for agents to leverage the behavioural patterns of their client base and deliver in a more pro-active and engaging sales experience.  Gartner estimates that by 2016 two-thirds of the global workforce will own a smartphone and 40% of the workforce will use these devices as the main tool for business1.  This means that a large percentage of agents and brokers will be mobile-based using mobile devices to deliver value to their clients.  Some interesting statistics, that provide further evidence of the importance of providing mobile digital solutions, are the fact that gadget ownership is generally correlated with age, education, and household income and that Tablets PCs are as popular, or even more popular, with adults in their thirties and forties than young adults ages 18-292.  So the standard profile of a Tablet PC owner is an educated, affluent 30 to 40-year-old… an important demographic for life insurance companies!

Mobile design is evolving

So whilst mobile devices present opportunities to the life insurance industry it is imperative that insurers must deliver effective digital solutions to take advantage.  The proliferation of devices from providers that use various operating platforms such as Apple iOS, Google Android, Windows 8 or Blackberry OS for example, means that developing solutions for a plethora of different devices is difficult.  However, the move toward the Bring Your Own Device (BYOD) model of mobile working, where employees are not prescribed specific devices by their employers but choose to use their own devices that they are more familiar with, means that developing solutions across a number of devices is, and will be, a real requirement and a real challenge. The move to a more fluid User Interface design, where screens respond to the device being used to view them, is becoming more popular within the system design community.

MRAS_Responsive_UI

Figure 1 – Fluid Interface design allows interface to be optimised for each device

 

Online solutions offers many advantages

Wifi and 4G are other technologies that are dictating how insurers sell their products.  For many years offline systems were touted as the saviour of remote point-of-sale solutions.  However, offline solutions present a myriad of difficulties for insurers including:

  • The cost of maintaining offline systems coupled with the difficulties of synchronising with online systems quickly reduced any benefits
  • The reluctance of clients to allow sensitive data such as financial details and life insurance disclosures to be stored offline on a device that could be stolen and easily accessed was a barrier to adoption
  • Insurers cannot capitalise on the benefits of online collaboration with their agents

With online solutions, the prevalence of data security issues where customers personal details are exposed due to laptops being stolen from agent vehicles or homes5,6,7 are negated as all client data is stored on the insurer’s secure servers.

Online mobile, with automated underwriting, can collapse the sales cycle

Perhaps the biggest advantage of mobile multi-platform digital solutions is the impact in reducing the sales cycle. However, data capture mobile applications are not enough and to be truly beneficial to the agent, mobile digital solutions should harness the power of automated underwriting. This gives the agent the flexibility to close a sale in a single meeting and dramatically improve the client experience. An agent could visit a client, capture application information on his digital device and deliver an underwriting decision in a matter of minutes. Automatically underwriting the application and accepting a client at point-of-sale greatly increases the agent’s chances of completing the sale.  Figure 1 below illustrates the decreasing chances of selling a product as the sales cycle time increases:

The need for speed

Figure 2 – The longer the sales cycle the less chance of making the sale

By providing a mobile accessible and user centric point-of-sale solution insurers can fully underwrite and sell a policy at point-of-sale via their agents or direct to the client.  A fluid design offering means that agents can ask clients to complete the application on their device or even on the client’s own device.

One of the positive spin-off benefits from automated underwriting is that underwriting data is captured digitally and therefore can be analysed in the future to further improve the underwriting process (thereby creating a reinforcing cycle and a potential source of competitive advantage).

How can underwriting be automated ?

Online mobile solutions offer the prospect of straight through processing. However, achieving that goal means that the complex insurance underwriting rules need to be systemised. These rules include:

  • Intelligent dynamic underwriting questions when adverse answers are provided during initial underwriting
  • Rules based systems that help decisions to be made quickly, accurately and with minimal customer inconvenience

Figure 2 below shows the type of  decision tree that an automated underwriting solution will provide.

Digital insurance underwriting decision tree

Figure 3 – Automated underwriting systems use decision trees

 

The future of underwriting automation

Insurers should look for scalable, multi platform solutions incorporating:

  • HTML 5 based user-centric interface that comes out-of-the-box
  • User configurable styles
  • Channel-specific screen versions
  • Platform agnostic responsive design allowing interface to be viewed on all devices (tablet/mobile/laptop/desktop)
  • Rules based systems that are easy to configure and are based on the accumulated underwriting experience of reinsurers
  • Systems that exist and operate independent of back-end policy systems

The prevalence of mobile digital devices has led to a profound change in how global business is now undertaken.  Consumers now demand products and services instantly. It is vitally important that the insurance industry not only refuses to ignore this trend but takes advantage of all of the opportunities afforded by it.  Mobile is no longer the future… it is the now! Underwriters face a much more interesting and automated future.

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Please feel free to share this article with your colleagues. And don’t forget to Sign Up to our email newsletter to be the first to see future articles that are posted on The Digital Insurer. In future articles The Digital Insurer will explore how to set the best roadmap for your organisation and what the challenges you may face as you start to deploy The Digital Advisor model.

If you have comments and suggestions on this article of for future articles please contact us directly or just leave a comment below.

Related articles that explore The Digital Advisor model further include:

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About The Digital Insurer

The Digital Insurer is a blog/article forum and accompanying email newsletter maintained for the benefit of insurance professionals interested in improving on existing business models, or creating new business models that take advantage of technology developments. More about The Digital Insurer

 Sources:

  1. http://www.gartner.com/newsroom/id/2207915
  2. http://pewinternet.org/~/media/Files/Reports/2012/PIP_Digital_differences_041312.pdf
  3. http://www.wballiance.com/wba/wp-content/uploads/downloads/2012/07/16_WBA-Industry-Report-2011-_Global-Developments-in-Public-Wi-Fi-1.00.pdf
  4. http://articles.economictimes.indiatimes.com/2012-04-10/news/31318919_1_td-lte-broadband-airtel-chairman-sunil-mittal
  5. http://www.theregister.co.uk/2007/02/14/nationawide_fined/
  6. http://www.bbc.co.uk/news/uk-scotland-glasgow-west-18399576
  7. http://www.irishtimes.com/newspaper/ireland/2012/0211/1224311622744.html

 

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