The underwriters of the future must become skilled statisticians and get to grips with emerging technologies if they are to meet the needs of both businesses and consumers.
This is according to a report produced by the Chartered Insurance Institute’s 2021 Underwriting New Generation Group which showed traditionally the skills required of underwriters have been analytical in nature.
Consequently, the report found sought after candidates mostly had STEM (science, technology, engineering and mathematics), business or economic degrees.
However the group’s report, based on research including a survey of the Society of Underwriting Professionals members and interviews with chief underwriting officers and HR directors, found a more diverse set of digital analytical skills will be required to be a successful underwriter.
Given the challenges around recruiting suitable candidates with both these analytical and behavioural aspects, the group’s research found a growing number of advocates for the splitting of underwriting roles, differentiating between technical and trading or development roles.
The group said if the underwriting profession is to keep pace with the changing needs of consumers and businesses then insurers need to make targeted investments to enable migration to a more future-forward technology stack that can support a two-speed IT architecture alongside programmes focussed on talent acquisition and upskilling.
In order for the underwriting profession to be fit for purpose in future the report recommends:
- New and existing underwriters should adapt and develop new skills alongside their core underwriting abilities to effectively collaborate with data specialists. These skills include the understanding and use of pricing models, data analytics, portfolio management and data manipulation.
- Upskilling should be the preferred method when there is enough time to plan, train and execute.
- External recruitment, specifically for skilled hires, should be considered effective in the short-term when time to execution is critical and the suitable candidate needs to hit the ground running.
The group warns failing to adapt quickly enough to this changing climate of skillsets will mean insurers are not only likely to lose their staff but also to see the impacts on their top and bottom line.
CII 2021 Underwriting New Generation Group member Marcus Li, senior strategy associate of Aon Inpoint, said: “Underwriters need to be empowered with the ability to interpret data they either were not able to or did not have access to previously.
“Up to 30% of underwriting roles could involve greater interaction with data scientists and the use of quantitative tools. Another 30% of roles could be automated, reducing manual and routine tasks to free up workforce capacity to attend to more value-adding business questions.
“Underwriters will not become programmers themselves, but they will work extensively with colleagues in newer digital and data-focused roles to develop and manage underwriting solutions.
“Underwriters have had to be agile and respond to the new working environment and technology. The requirement and demand for professional skills have not diminished, but rather augmented, becoming perhaps ever more important.”
Jonathan Clark, interim CEO of the CII, added: “With the increase in use of data we are seeing a shift from underwriters being expected to detect and repair to consumers and businesses wanting the profession to help them predict and prevent risks.
“Clients and underwriters alike will reap the benefits of data-driven methods of monitoring exposure and mitigating losses, as well as using ever enriched claims data to drive better underwriting decisions that legacy rating methods would measure short against.”
