Yes, underwriting and regulatory compliance jobs will be lost as systems become more intelligent. It has already happened and will continue. Period.
I’ve been in underwriting for 10 years and have seen a consistent decrease in need for underwriters as systems replace manual(human) processes. Also, there is a lot of age discrimination going on right now because the younger people are faster with the learning curve of tech implementation and the task of operating the systems. The cheese is moving…
Tommy, you’ve probably read my previous comment and therefore you know I agree with you whole heartedly. If they can send a spacecraft to the outer edges of our universe based on old computer technology, does anyone think they need an underwriter? Does a Risk MAnager need a broker when you have a AI watson to delve out all the statistics all the probabilities, all the available capacity that fits his bill? No. However, there is hope for a broker in that a Risk Manager who needs to point a finger at someone other then him/herself when the bad thing happens will always need a warm body to dispose of.
What your seeing is history in the making. Computers such as Watson will get better and better over time. The need for brokers and underwriters will be squeezed rapidly. Every insurance CEO is looking for increased productivity. Increased profits means better shareholder value, better share prices and , of course, better Executive bonuses. The propaganda put out by Bisker and IBM in general about it’s limited ability to replace humans is simply malarky. IBM wants to do big business in the insurance industry and this is a area where they have a real edge on the competition. They will capitalize on it to the extent possible. Thye may not replace every broker nor every underwriter but I’ll bet they replace the majority in due course.
Most of the Standard Markets for Commercial have their pre-programmed underwriting for BOP’s and small packages. Everything has to fit in their neat little box and if it does, it issues a quote. If not, we have to ask underwriting. There is very little adjustment to pricing that can be made. It is ok for small accounts, but not for larger, more sophisticated accounts. We have seen companies cut back on staff, claims, loss control and farm those things out to independents. New wave and we have to get used to it.
Want to throw a monkey wrench into the march towards automation? Get the use of credit banned in every state this would put the business of insurance back in the hands of underwriters, regulators and agents and out of the hands of the automated bean counters.
I am not a big fan of credit scoring to price Auto & Home. The market rewards people with high scores and penalizes those with average scores. In this economy with so much debt and unemployment, the scores are bound to deteriorate to a great extent and companies will then increase their renewals at the worst possible time for customers who are struggling to make ends meet. This is called the law of unintended consequences and will be bad for many years.
Why deal with an obnoxoius agent or producer a when you will be able to order insurance over the internet with a computer and not have to pay commision to the producer at cheaper price.
The writing is on the wall its a new business paradign. Look whats happening to Circuit City, Best Buy and Borders and Barnes and Noble. Those jobs are disappearing just like brokers and agents for small business.
That attitude may be fine for auto and cookie-cutter casualty products, but there will always be a need for agents/brokers in the property markets. Just my two pennies.
Do you really believe insurance will be cheaper just because no agent got paid commission? Wow. So those 800# people who take your call aren’t paid? So the company doesn’t spend tons of money on their internet we page you bought insurance from not to mention all the TV ads? Funny how agents can beat the price from your internet only insurance policy. Kind of takes the commission worry right out of your comment.
Touche’ Wayne 2:
If we really are such a “bloat” on the business, the best they could hope to cut costs by would be about 7%, unless it can be claimed we do absolutely nothing for our money. They will pay all the salaries for people to put up with all the retail BS we have to clean up after that the companies create since they are thier own worst enemy when it comes to PR.
I don’t think 7% is too much to pay for an advocate.
Do these types of systems really increase productivity, accuracy and save money or do they ultimately just move figures around in the financial statements? Management gets to go to the shareholders and say look at the payroll and benefits savings we have accomplished by cutting staff. And we taken that savings and invested it in a stronger technology platform that will increase operating efficiency.
Yes, the $1,000,000 we’ve saved annually by eliminating a bunch of $60,000 a year positions will now be put towards licensing fees for the new technology, depreciable capital expenses for the new servers, and maintenance contracts ($100,000 a year positions on someone else’s payroll). And to ensure that we still have that personal touch we’ve contracted with a third party call center in India to answer the questions that the AI cannot.
To what end – A press release touting our embracing of technology and the future for a short term stock bump; when in fact we’re moving a large portion of our business to technology and locations where we now have very little control or insight of daily operations or long-term strategic direction.
I do see that whatever morphs into Obamacare will end up with online applications to a government or company website and the agent will be gone. The markets have already cut commissions on Individual products. Who wants to do the work for a pittance and deal with all the issues the customer has? P&C will still have the majority of business conducted by agents. Some companies have tried the direct route and have found that it didn’t work so well for them. Gieco, Progressive & 21st Century have it down to an art form so they will be around, but the rest of the business will be available, particularly on the Commercial side.
Tommy, while I realize that may be where they are trying to head, I used to work at a carrier where they said predictive modeling would work on accounts up to $100k in premium. The reality is it works up to about $10k, and above that you still need an underwriter to actually think about it.
I am of the opinion there are far too many variables out there for it to ever not need underwriters versus a machine.
MoltarRocks, It’s also the processes that are being streamlined, the tools that allow each UW to accomplish more.
Take for example, property inspections. Remember when we used to review each one for condition and accuracy of UW data? Now the reports come back in HTML format, get attached directly to the file and data is checked against the app and flagged if there are inconsistencies. A majority of the inspections are not reviewed by humans, and yet the risk is mitigated. Take it further, set degrees of flags and sort in the queue so the worst files are addressed first; have the system look for specific words like debris or deterioration, and do a word count in the negative comments section. Put all this together and develop a “score” so your underwriters can look at the highest exposures first.
In the beginning of my career I spent hours and hours do menial tasks thinking there has got to be a better way. Turns out, there is, and it takes far fewer people to do it. That was my point.
Two thoughts on this. Who holds the purse strings on buying new equipment – senior managers who have been burned before in laying out millions upon millions of dollars in new systems and service centers only to have them demolished 3 years later when agents complain about service. Second, as a consumer of insurance I will never talk to a computer when buying a product which affects the assets and protection of my family. I may be old school in my thinking but I cannot visit a computer if there is something wrong with my house or car insurance.
Not likely. Perhas as a tool for underwriters to investigate certain aspects, but not to replace underwriters.
What people don’t realize, because this was certainy not emphasized, was how often Watson just came up with an answer that was not only wrong, but not within a few thousand miles of the ballpark.
Here is what Watson is: Another version of Google, with some additional cross-referencing built in. Nothing I would stake an overall underwriting decision on.
Yes, underwriting and regulatory compliance jobs will be lost as systems become more intelligent. It has already happened and will continue. Period.
I’ve been in underwriting for 10 years and have seen a consistent decrease in need for underwriters as systems replace manual(human) processes. Also, there is a lot of age discrimination going on right now because the younger people are faster with the learning curve of tech implementation and the task of operating the systems. The cheese is moving…
I like to hear your thoughts.
Tommy, you’ve probably read my previous comment and therefore you know I agree with you whole heartedly. If they can send a spacecraft to the outer edges of our universe based on old computer technology, does anyone think they need an underwriter? Does a Risk MAnager need a broker when you have a AI watson to delve out all the statistics all the probabilities, all the available capacity that fits his bill? No. However, there is hope for a broker in that a Risk Manager who needs to point a finger at someone other then him/herself when the bad thing happens will always need a warm body to dispose of.
I saw this coming in the 90’s when we went from desk underwriting auto insurance to computer assisted underwriting models.
The real question is, can Watson sell a non-standard auto insurance policy in the hood?
Lol, will Watson know to quote a Buick La-Sabre when the insured says “burrick la-say-bra”?
Or what a Duce and a Quarter is (as in Electra 225)!
Or Riviera “coverage not available in France”.
What your seeing is history in the making. Computers such as Watson will get better and better over time. The need for brokers and underwriters will be squeezed rapidly. Every insurance CEO is looking for increased productivity. Increased profits means better shareholder value, better share prices and , of course, better Executive bonuses. The propaganda put out by Bisker and IBM in general about it’s limited ability to replace humans is simply malarky. IBM wants to do big business in the insurance industry and this is a area where they have a real edge on the competition. They will capitalize on it to the extent possible. Thye may not replace every broker nor every underwriter but I’ll bet they replace the majority in due course.
Watson would really come in handy with Actuarial Studies. Wait, are they already using computers?
Most of the Standard Markets for Commercial have their pre-programmed underwriting for BOP’s and small packages. Everything has to fit in their neat little box and if it does, it issues a quote. If not, we have to ask underwriting. There is very little adjustment to pricing that can be made. It is ok for small accounts, but not for larger, more sophisticated accounts. We have seen companies cut back on staff, claims, loss control and farm those things out to independents. New wave and we have to get used to it.
Want to throw a monkey wrench into the march towards automation? Get the use of credit banned in every state this would put the business of insurance back in the hands of underwriters, regulators and agents and out of the hands of the automated bean counters.
I am not a big fan of credit scoring to price Auto & Home. The market rewards people with high scores and penalizes those with average scores. In this economy with so much debt and unemployment, the scores are bound to deteriorate to a great extent and companies will then increase their renewals at the worst possible time for customers who are struggling to make ends meet. This is called the law of unintended consequences and will be bad for many years.
Why deal with an obnoxoius agent or producer a when you will be able to order insurance over the internet with a computer and not have to pay commision to the producer at cheaper price.
The writing is on the wall its a new business paradign. Look whats happening to Circuit City, Best Buy and Borders and Barnes and Noble. Those jobs are disappearing just like brokers and agents for small business.
That attitude may be fine for auto and cookie-cutter casualty products, but there will always be a need for agents/brokers in the property markets. Just my two pennies.
Do you really believe insurance will be cheaper just because no agent got paid commission? Wow. So those 800# people who take your call aren’t paid? So the company doesn’t spend tons of money on their internet we page you bought insurance from not to mention all the TV ads? Funny how agents can beat the price from your internet only insurance policy. Kind of takes the commission worry right out of your comment.
Touche’ Wayne 2:
If we really are such a “bloat” on the business, the best they could hope to cut costs by would be about 7%, unless it can be claimed we do absolutely nothing for our money. They will pay all the salaries for people to put up with all the retail BS we have to clean up after that the companies create since they are thier own worst enemy when it comes to PR.
I don’t think 7% is too much to pay for an advocate.
Do these types of systems really increase productivity, accuracy and save money or do they ultimately just move figures around in the financial statements? Management gets to go to the shareholders and say look at the payroll and benefits savings we have accomplished by cutting staff. And we taken that savings and invested it in a stronger technology platform that will increase operating efficiency.
Yes, the $1,000,000 we’ve saved annually by eliminating a bunch of $60,000 a year positions will now be put towards licensing fees for the new technology, depreciable capital expenses for the new servers, and maintenance contracts ($100,000 a year positions on someone else’s payroll). And to ensure that we still have that personal touch we’ve contracted with a third party call center in India to answer the questions that the AI cannot.
To what end – A press release touting our embracing of technology and the future for a short term stock bump; when in fact we’re moving a large portion of our business to technology and locations where we now have very little control or insight of daily operations or long-term strategic direction.
I do see that whatever morphs into Obamacare will end up with online applications to a government or company website and the agent will be gone. The markets have already cut commissions on Individual products. Who wants to do the work for a pittance and deal with all the issues the customer has? P&C will still have the majority of business conducted by agents. Some companies have tried the direct route and have found that it didn’t work so well for them. Gieco, Progressive & 21st Century have it down to an art form so they will be around, but the rest of the business will be available, particularly on the Commercial side.
Tommy, while I realize that may be where they are trying to head, I used to work at a carrier where they said predictive modeling would work on accounts up to $100k in premium. The reality is it works up to about $10k, and above that you still need an underwriter to actually think about it.
I am of the opinion there are far too many variables out there for it to ever not need underwriters versus a machine.
MoltarRocks, It’s also the processes that are being streamlined, the tools that allow each UW to accomplish more.
Take for example, property inspections. Remember when we used to review each one for condition and accuracy of UW data? Now the reports come back in HTML format, get attached directly to the file and data is checked against the app and flagged if there are inconsistencies. A majority of the inspections are not reviewed by humans, and yet the risk is mitigated. Take it further, set degrees of flags and sort in the queue so the worst files are addressed first; have the system look for specific words like debris or deterioration, and do a word count in the negative comments section. Put all this together and develop a “score” so your underwriters can look at the highest exposures first.
In the beginning of my career I spent hours and hours do menial tasks thinking there has got to be a better way. Turns out, there is, and it takes far fewer people to do it. That was my point.
Two thoughts on this. Who holds the purse strings on buying new equipment – senior managers who have been burned before in laying out millions upon millions of dollars in new systems and service centers only to have them demolished 3 years later when agents complain about service. Second, as a consumer of insurance I will never talk to a computer when buying a product which affects the assets and protection of my family. I may be old school in my thinking but I cannot visit a computer if there is something wrong with my house or car insurance.
Not likely. Perhas as a tool for underwriters to investigate certain aspects, but not to replace underwriters.
What people don’t realize, because this was certainy not emphasized, was how often Watson just came up with an answer that was not only wrong, but not within a few thousand miles of the ballpark.
Here is what Watson is: Another version of Google, with some additional cross-referencing built in. Nothing I would stake an overall underwriting decision on.