Underwriting is the process through which an individual or institution takes on financial risk for a fee. The risk most typically involves loans, insurance, or investments. The term underwriter originated from the practice of having each risk-taker write their name under the total amount of risk they were willing to accept for a specified premium. Although the mechanics have changed over time, underwriting continues today as a key function in the financial world.
Underwriting often involves extensive study of the customers’ resources and takes a lot of time in cross verifying the customer’s attributes related to the insurance applied in the specific sector. For example: In the field of health insurance, the underwriters need to cross-check the health parameters of the customer such as BMI, smoking/drinking habits, diseases and many more. Also, these parameters need to be cross-checked after a regular interval of time so that the company can make sure the customer stays in good health condition with the passage of time.
This has been a serious obstacle when it comes to an underwriter’s work since it requires them to scan through and analyze a lot of data to keep their “Customer analysis” updated. Also, cross verifying the documents is also a very hefty process because in a lot of scenarios, information is lied about or tampered with. For example, A person who might be a chain-smoker is very unlikely to admit that he is one.
Surveys indicate that underwriters spend less than half of their time in underwriting since their procedures are extremely laborious and involve a lot of verification. Also, the crucial points where underwriters face a lot of struggle can be summarized into the following points:-
• Attending Physician Statements (APS) Summaries – While imperative, these laborious administrative tasks disrupt workflows and are quite taxing on senior staff’s time.
• Trial Applications/Preliminary Inquiries – Underwriters can spend hours combing through the (often extensive) information provided on a preliminary case… that may or may not come through as an application… and may or may not turn into a formal application.
• MIB Follow Ups – reviewing any follow-up hits and the previous application takes time. Liaising with other insurance companies can also lead to extensive back-and-forth and lengthy email threads.
• Contestable Claims – lengthy reports on their own are time-consuming. Add to that time for reviewing the original application and evidence, it can make contestable claims long and difficult.
But thanks to the massive development of ML/AI/Deep Learning in today’s world, these obstacles in an underwriter’s life will soon be a thing of the past.
In fact, we at Sparshik have already found a way to progress towards this goal and will definitely make the lives of underwriters far more efficient.