“Digital underwriting and quote-bind is only for retail insurance and simple products” – A myth debunked
Our clients and most insurers face the same challenge. How do you offer quality insurance protection at a price that is attractive to clients, and how do you keep doing this sustainably in an environment where there is pressure on margins coupled with higher customer expectations. In personal lines, automation and digitisation can drive down cost, but in other segments, one has to rely on limited transparency to justify high premiums needed to pay for manual processes. Obviously that’s the only way when it comes to SME, commercial or speciality risk. It’s too complex. Each risk requires individual assessment. E-Mail, phone and excel is already as good as it can get. Right? But Why?
Sure, many SME risks and maybe even some commercial and speciality risks could be captured by rules based underwriting, but there are too many exceptions. Also, to price complex risk much data is needed, many questions are nuanced but data accuracy is vital, so human intervention is needed everywhere. It’s too hard to get all these parts right when trying to digitise or automate processes, so all one can do is to try to focus on the higher value risk and not even to bother with the rest. Or is there more?
KASKO has been working with Insurers to digitise their product offering since 2015, but in 2017 the first forward looking insurers started leveraging our platform for verticals outside personal lines. While it started with a number of insurers wanting to offer cyber SME insurance digitally, in 2020, we now have the following SME products on our platform.
- Baloise CH: Cyber, Legal Risk
- Signal Iduna: Online Legal Risk
- ROLAND: Legal Risk
- Zurich DE: Car interior, Cyber, D&O
Insurers started engaging about other SME covers, as well as speciality insurances offered by Lloyd’s Managing Agents to brokers or coverholders. But did that mean the problems above were not real?
Of course they are and they need to be addressed. This is how KASKO helped solve these challenges. Too hard to get all these parts right – The truth is you shouldn’t try to solve all challenges at once. Focus on the lowest hanging fruit. First, the areas where real advantages can be gained and then expand step by step. For Zurich’s Cyber and D&O products we started digitising the quote & bind for SMEs. Later, with additional questions the workflow for Commercial clients could be digitally supported as well. KASKO’s platform provided the flexibility to offer different variants of the product for different channels.
Too many exceptions – not all risk can be priced in an automated manner, but KASKO’s platform allows insurers to set both pricing and underwriting rules. So clients and brokers can leverage digital quote–bind solutions to get prices and policies quickly where it makes sense, while risks outside predetermined parameters can be filtered and handled in a digital but manual underwriting workflow. The advantage in either case is having the data in structured and easily auditable formats.
Much data is needed, many questions are nuanced but data accuracy is vital – This is true, but actually not a problem unique to SME, Commercial or Speciality risk. Home or Motor products often asked dozens of questions. But nowadays there are many 3rd party data sources that can be used to get data, improve quality and augment underwriting. KASKO’s experience includes pulling company data from commercial databases, to shorten question sets, improve accuracy and avoid “misrepresentation”. KASKO enables insurers to work with IoT providers (can be used to dynamically price complex commercial risk) and connects to 3rd party APIs for parametric insurance. But nuanced questions can remain, and KASKO’s save for later functionality, allows customers and brokers to save their progress on a digital application, seek help and restart later.
You’re not alone. We can help.
Are you facing challenges around digitalisation, new product innovation or reaching new distribution channels? Are IT resources limited or tied up in other projects?