Significantly Reducing Underwriting Tasks with Big Data and AI Technology
AI's Role Gradually Increasing in the Unique Domain of Designers
"An Opportunity for Premium Reduction... Need to Also Check for Potential Blind Spots"
Insurance companies are undertaking the automation and simplification of 'underwriting,' the final decision-making process on whether to approve insurance applications, by utilizing artificial intelligence (AI) and big data. The strategy aims to reduce costs, increase productivity, and improve operational efficiency and profitability.
According to the insurance industry on the 15th, DB Insurance obtained a patent yesterday for its pre-underwriting 'AI Assistant System.' This system can simultaneously perform coverage analysis, customized design, and underwriting for each customer using AI. DB Insurance introduced the AI Assistant to its sales field in June last year. So far, about 6,000 planners use the AI Assistant monthly, concluding contracts worth 300 million KRW with over 100,000 customers, demonstrating high utilization. A DB Insurance official explained, "The underwriting results conducted by the AI Assistant are becoming more sophisticated through data learning, enabling us to offer insurance subscription services through more channels in the future," adding, "It is a useful tool that not only improves simple repetitive tasks but also creates new value."
Hanwha Life introduced a pre-underwriting system on the 13th. Previously, Hanwha Life conducted underwriting after customers completed application documents and paid the first premium. Depending on the review results, additional underwriting conditions could be imposed, or applications canceled, leading to trust issues between customers and planners or contract failures. There were also cases where the review period was extended because customers did not clearly disclose their duty to inform. The newly introduced system allows planners (FPs) and customers to automatically and conveniently input duty-to-inform items during the insurance subscription stage by retrieving insurance payment histories from Hanwha Life and other companies after customer consent. Pre-screening is then conducted to minimize post-application supplementation and returns. A Hanwha Life official said, "We completed a field test with about 170 Hanwha Life Financial Service planners over three months starting last November," adding, "The insurance subscription review process, which used to take a week, has been shortened to one day."
Mirae Asset Life Insurance introduced the digital-based underwriting system 'Mi-choice Pre-screening System' in October last year. It allows immediate confirmation of a customer's eligibility for insurance products before application using pre-verified medical history information. If supplementary documents are required based on the review results, the system automatically prints them, minimizing procedures such as document submission. Scenario rules for all disease codes (KCD) have been established, updating the question-and-answer criteria for each disease?such as disease name, treatment details, and surgery status?according to the latest review standards to improve accuracy. Mirae Asset Life plans to raise the automatic insurance subscription review rate to over 70% through this system.
Typically, life insurance companies conduct underwriting with 'application first, review later,' while non-life insurance companies use 'review first, application later.' Underwriting has traditionally been considered a specialized area unique to planners in the insurance industry, but with the advancement of AI technology, automation and simplification have become an inevitable trend. For both insurers and customers, undergoing transparent and accurate pre-application reviews and quickly subscribing to insurance is the best way to reduce unnecessary conflicts. As AI technology advances, pre-underwriting conducted by AI is expected to become the norm for both life and non-life insurers. Overseas insurers such as Japan's Fukoku Life and China's Ping An Insurance have significantly improved operational efficiency by entrusting a substantial portion of underwriting and claims adjustment tasks to AI.
Experts believe that automation of underwriting could lead to lower insurance premiums. Professor Seo Ji-yong of the Department of Business Administration at Sangmyung University said, "If costs are reduced through underwriting automation, it will significantly help insurers lower premiums," adding, "This trend will spread to exclusive planners of insurance companies as well as corporate insurance agencies (GA)." However, he also cautioned, "If all tasks become automated and face-to-face services disappear, there is a risk of creating blind spots such as digital exclusion among the elderly."
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