Every part of the insurance industry is talking about digital transformation. Underwriting, the traditional heart of the insurance enterprise, is no exception.

Executive Summary

A digital underwriting transformation must align with the operating model of customer segments, according to EY's Gail McGiffin. She notes, for example, that the underwriting typical of middle market and larger commercial business requires substantially more data but less decision and process automation than smaller commercial risks, where higher levels of decision automation and intuitive user experience are expected. After defining exactly what it means to undergo a digital transformation, which includes attention to both customer-facing transactions and critical internal functions, McGiffin also presents some results of EY's 2017 Digital Underwriting Survey and addresses the idea of human-free underwriting.

Because this idea is discussed so frequently, it’s worth defining specifically what it means to be a digital insurer and what digital underwriting looks like, as well as describing what it takes to realize the vision.

At the enterprise level, digital transformation is best defined as capitalizing on the power of technology to upgrade business and operating models, to acquire and service customers across diverse channels, and to create essential user experiences. For most underwriting groups, this is a two-step journey:

Modernizing core processing systems to establish a foundation for increased automation, rules-based decision-making, stronger analytics and more effective use of data. Enabling the efficient transactions, continual insight generation, personalized communications and richer experiences that are associated with digital leaders in insurance and other sectors.

It’s important to note that this particular view of digital incorporates both customer-facing interactions (e.g., sales and service) and critical internal functions (e.g., underwriting risk selection and pricing, policy administration, billing). To become truly digital, insurers must address both the commercial and communication elements of their business.

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