Automated underwriting is a hot topic in insurtech currently. It basically means using different algorithms and data to decide if someone qualifies for insurance and how much they should pay, without human intervention or agent interuption.
This may sound a bit frustrating but here are the points to clearify the advantages of this-
- Faster Approvals: No more waiting weeks for a decision. Automated systems can give you an answer in minutes. So, instead of waiting for a long period of time to get your insurance claimed, you can simply claim the frosts within minutes.
- Reduced Bias: Human bias can creep into traditional underwriting. Automation aims to remove that, making decisions fairer and equal for all categories of customers.
- Lower Costs: Less paperwork and fewer staff could lead to cheaper insurance for everyone. Therefore, lower the cost higher is the affordability.
Every new system comes up with disadvantages too. In comparision to the advantages, here are some demerits of the following-
- Accuracy Concerns: What if the data is wrong? Could some people be unfairly denied coverage? It focuses on whether the user is entering the correct and legal data. This is especially monitored by system software and majorly used to avoid any frauds. So, the concern only arises of the software is not built properly.
- Job Losses: With fewer underwriters needed, some people might lose their jobs leading to mass job losses and unemployment.
- Black Box Problem: It can be hard to understand how these algorithms work, making it difficult to challenge a decision and predict the result. Problems may also arise if these data sets can not be modified to other changes.
The debate is ongoing. While automation offers speed and efficiency, it also raises questions about fairness and transparency. As insurtech continues to evolve, finding the right balance between technology and human expertise will be the key in future insurance.
