Underwriting converges with risk management, says Flyreel CEO

The underwriting process is converging with the risk management activities of insurers, Cole Winans, CEO of Flyreel, told Intelligent Insurer.

US-based insurtech firm Flyreel enables artificial intelligence (AI) assisted underwriting through its application for property insurance by guiding end users through inspections.

When the policyholder scans their utility room the gathered information may show that hot water is likely to leak within the next 12 to 15 months, Winans explained. The carrier can use this data to prevent a loss from happening, he said. The insurer can, for example, offer a policy discount for the policyholder to switch to a different product or send a sensor that will detect the leak early, he suggested.

Cole sees three trends developing in the insurance industry. One is automated underwriting which allows for personalised and dynamic coverage. Another is a move towards proactive and automated risk management as insurers engage more frequently with policyholders. The third one is automated claims handling.

“The market is really evolving into having automation across the whole value chain,” Winans said. This has not been possible in the past as there had been no good quality records of properties, he explained. “Now carriers can more actively manage the risk and price more accurately,” he said.

In the future, insurers will need less of their workforce devoted to simple tasks and instead they will be able to redirect them to more valuable tasks, Winans noted. Instead of sending staff to document the property value and assess the risk, for example, an insurer can deploy its capabilities more efficiently and engage with customers for example by offering personalised coverage and recommendations, he said.

“The macro level shift will be more towards customer service and customer experience rather than logistics. That’s where we think there is going to be a significant redirection of capital and resources,” Winans said.

The technology-driven development will reduce indemnity at claims, loss adjusting expenses, administrative cost and the burden of servicing claims, Winans suggested.

“The risk profile will go down and I think long term that can result in lower premiums but that is in parallel to a reduction in administrative cost for the carriers,” he said.

Winans does not believe that this will lead to lower margins for insurers.

“I think as insurance moves in this direction it becomes a much more lucrative business. That differentiation will centre around a carriers’ ability to act on this data to provide even more value to that customer,” he said.