Group CUO from Zurich on the development of underwriting | Insurance business America
How will GenAI impact the role of the underwriter in the future?
technology
By Mia Wallace
Penny Seach (pictured), Group Chief Underwriting Officer at Zurich Insurance, is a strong believer in the transformative power of underwriting and is keen to demonstrate that underwriting is “the heart and soul of an insurance organisation”. There are few in the industry so well placed to make this statement.
How the role of the underwriter has changed – and how it hasn’t changed
Seach discussed the future of underwriting in a recent interview with Insurance Business, examining how underwriting has—and hasn’t—changed over the course of her career so far.
“What has changed is the fast-moving complexity of the world around us and our activities,” she said. “Even compared to a year ago, there is more complexity now. From an insurance perspective, the way we think about, understand and process risk continues to evolve very quickly.
“With regard to the underwriting profession, it has always been crucial to use critical thinking skills to make an assessment and then move through the underwriting process and determine the right capacity and terms for a risk. That essentially hasn’t changed, but the complexity of the changing world with the rapid development of technology provides an environment in which an underwriter can thrive.”
The Impact of New Technologies on Underwriting and Underwriters
Seach highlighted how new and innovative technologies, including generative AI (GenAI), are being used to complement underwriters’ capabilities and create new speed and scope of decision-making. When she thinks about what keeps her up at night, she says, it’s the intersection of concentration risk and concentration exposure.
In addition to the rapid development of technology, the insurance market is faced with numerous complex risks and the increasing interconnection of these risks, she said. From an insurance perspective, it is important to think about what this interface could look like and find ways to use it to the benefit of insurance companies and, most importantly, the customers they serve.
“The other interesting aspect is that traditionally we have used historical data to predict what we think future trends will be,” she said. “Of course there is still room for that, but you also need to have an overview of those changes. Relying solely on historical data may lead you astray. You need to consider how things have changed and where they might go next.
“There is more uncertainty when looking at future trends, but I think we can use technology in smarter ways to help us, not to make decisions for us. We use scenarios to understand concentration risks and what they could mean for us. We can now quickly use AI to model possible scenarios and gain new insights from them. Previously, you would enter the problem and get the modeled results, whereas now you can understand the path of that thinking.”
This understanding allows underwriters to think more creatively about risk, Seach said, and explore different scenarios that diverge from the original problem. This is one of the key ways she sees firsthand how technology is enabling underwriters to better consider and deal with potential areas of systemic exposure or concentration risk.
Balancing short-term and long-term threats and challenges
As someone who has spent much of her career in liability underwriting – long-tail underwriting – Seach understands the delicate task of balancing real-time threats with long-term risks.
“Each underwriter obviously has their own perspective, but as liability underwriters we always say we have the most interesting role,” she said. “Because we think about today based on what happened yesterday and what it means for tomorrow… I think bringing AI into this problem statement helps us think better about what that intersection looks like.
“It’s easy to become overwhelmed when you think through different risk scenarios. But using AI to support your thinking can help you visualize potential risks and manage them in different ways.”
Understanding and leveraging the full potential of GenAI
The power of GenAI and LLMs like ChatGPT, from an underwriter’s perspective, lies less in how you handle your data, she said, and more in training your brain to ask the right questions.
Seach noted that from Zurich’s perspective, the ability to quickly and comprehensively access and perform advanced analytics supports, rather than replaces, the underwriting process. The goal is to access information and provide underwriters with new insights so they can engage with the data and ask the right questions.
“This helps us understand our customers better, and that’s what really makes a difference from our perspective,” she said. “After all, insurance is always about relationships. It’s about trust, credibility and how we interact with our customers.”
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2024-05-09 19:21:58
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