Since the insurance industry is rapidly evolving, insurers are now gearing towards digital distribution channels to keep up in the competition. Without a doubt, digital distribution comes with many benefits. But along with these benefits, there are also underlying impacts digital distribution can cause on the underwriting process.
In this blog post, we will discuss the impact of digital distribution on the underwriting process and how insurers can leverage digital insurance partnership and digital distribution solutions to improve the process.
The increased availability of data is one of the main impacts of digital distribution on the underwriting process. Digital distribution channels, such as online marketplaces and comparison websites, allow insurers to easily collect a large amount of data on potential policyholders. This includes demographic information, risk factors, and historical claims data. With these pieces of information, insurers can provide a more accurate risk assessment during the underwriting process.
However, with the increased availability of data comes the challenge of managing and analyzing it. Insurers must have the right systems and processes in place to effectively collect, manage, and analyze the data. This means that there’s a need for investing in digital insurance partnership and digital distribution solutions to help them manage the collected data better.
Since digital distribution channels automate most of the processes during underwriting, expect that there’s a significant impact on the speed and efficiency of how things are done. By providing customers with a convenient and efficient way to purchase insurance policies, insurers can reduce that time it takes to underwrite a policy, which in turn, can increase their conversion rates.
Along with digital distribution’s impact on speed and efficiency is the challenge of data completeness and accuracy. Insurers must have an efficient and accurate system that can collect all necessary information and perform risk assessment accurately. With the help of digital insurance partnership and digital distribution solutions, insurers can automate parts of the underwriting process and ensure that data is thorough and accurate.
Digital distribution channels also provide insurers with the opportunity to offer personalized and tailored insurance solutions to customers. With the aid of data and analytics, insurers can offer customized products that align with the needs of their customers.
This personalization can improve the underwriting process by providing insurers with a more accurate assessment of risk. However, it also comes with the challenge of ensuring that the personalization is done in a way that is compliant with regulations and ethical. Insurers should leverage digital insurance partnership and insurance digital distribution solutions that have built-in compliance and ethical considerations.
References:
PwC. (n.d.). The Impact of Digital Distribution on the Underwriting Process. Retrieved from https://www.pwc.com/gx/en/insurance/publications/the-impact-of-digital-distribution-on-the-underwriting-process.html
Oliver Wyman. (n.d). Digital Distribution and the Future of Underwriting. Retrieved from https://www.oliverwyman.com/insights/publications/2018/nov/digital-distribution-and-the-future-of-underwriting.html