Who needs underwriters when a robot could do the job just as well?
Absurd? Maybe not.
After all, driverless cars are a reality and there are fridges that can order groceries when you run out.
But what about more complex tasks? Tasks that call for judgement, experience and wisdom. Can a machine really replace a human being?
Well, according to news reports, an IBM computer called Watson recently managed to diagnose lung cancer with 90% accuracy. Human physicians have an average accuracy rate of 50%.
And a recent report in The Times suggested that underwriters were top of the list of “middle income” jobs that were most at risk from automation.
Algorithms, ‘big data’ and artificial intelligence (AI) are having an unseen and growing influence on our everyday lives. Progress is making a lot of people in more traditional, people-based sectors, like insurance, wonder if it’s time for a career change.
But at MS Amlin we are far from convinced.
In fact, we believe that modelling and data won’t replace underwriters, but will change their role for the better.
It’s inevitable that many manual tasks in our industry are likely to be automated.
It means that underwriters will be able to focus on analysing risk with much more information at their disposal.
The art of underwriting will remain a key skill in our business and could be significantly enhanced by investment in new technology, bringing knowledge of individual risk characteristics that were previously ignored or had to be estimated.
As Barry Panayi, our Chief Data Officer says: “The truth is that we have to understand the difference between technology and data. They are not the same thing.”
“Everyone seems to be looking for the gold mine that could result from data and technology, when in fact there are lots of little bits of gold dust we could be scooping up instead.”
“Underwriting is a combination of an art and a science. And it’s up to us to understand how we can enhance the science to improve the art.”
As an example Barry says: “If you take a physical asset like a yacht, you can work out the value of the yacht and how securely it is moored.”
“You may know something about the people who own the yacht. Do you really know who ultimately owns it? The underwriter will know whether to ask when the last time a safety check was carried out. But what about the captain? What about his safety record? Does he sail more safely if he has certain crew members with him?”
“What if an automated programme could bring into play other risk factors that haven’t traditionally been considered before? This puts the underwriter in a much stronger position,” says Barry.
“Underwriters are the original data processors. Where data technology can help is identifying a much bigger range of risk factors that may even not have been considered before.”
And for Barry it means that underwriters will have to become curators of information – data will augment the information they already have. Models will be able to serve up all kinds of information and it will be up to the underwriters to ignore or include that information when making their judgement.
At MS Amlin we believe in continuity and we’re convinced underwriters in our business will not be replaced, but the role is likely to change.
Technological support will free our underwriters to focus on other tasks – such as developing deeper relationships with customers and thinking more strategically about the business as a whole.
This means that in the future our underwriters will be able to enjoy a more interesting and effective role, that will both help our customers and contribute to the growth and strength of the wider business.