In the report we talk about how technology has helped evolution of Life and Health underwriting in the Insurance Industry and what the future holds.

1. USE OF TECHNOLOGY
IN LIFE AND MEDICAL
UNDERWRITING
BIRLA INSTITUTE OF MANAGEMENT
TECHNOLOGY
REPORT ON
Prepared by
Vasu Gupta

2. INDEX
Serial No. Topic Page No.
1 Introduction 1
Use of technology 2-3
2 in traditional Way
Of Underwriting
3 Use of technology 4-5
in Morden Way
Of Underwriting
4 What Future 6-7
Holds
5 Conclusion 8

3. INTRODUCTION
Underwriting is the identification and assessment of risk that would be
borne by the insurance company. Underwriting is done to eliminate adverse
selection & anti selection, and to charge the premium in the equitable
manner from all the insureds. It brings equity by charging extra premium
from those who are more prone to risk - that is when the hazard and the
probability of risk is high as compared to what is considered standard by the
respective company. It ensures that the risk is evenly spread across large
number of contributors also known as insureds.
Over the years technology has played a very significant role in the
penetration of insurance across the globe. With the use of Technology,
insurance companies have been able to offer more personalized customer
centric insurance products. It is technology that has streamlined the process
of customer onboarding and customer service. Technology has also helped
in faster claim processing and has played a vital role in fraud detection and
elimination. The Insurance Industry has also coined the term Insurtech that
aims to inculcate technology in the traditional way of selling insurance.
With insurance penetration being around 8 to 10% in the developed
countries and 3 to 4% in the underdeveloped countries it becomes
important to leverage technology in order to increase its penetration.
Technology can help create awareness about the need to mitigate risk by
using the available tool such as insurance. In this report we are going to
discuss about how the use of technology in life in medical and life
underwriting has played a crucial role in identification and assessment of
risk and the manner in which companies have been able to offer more
personalized and customer centric products over the period of time.

4. USE OF TECHNOLOGY IN TRADITIONAL WAY OF
UNDERWRITING IN LIFE AND MEDICAL INSURANCE
When we talk in terms of traditional way of underwriting where in
technology had a little role to play most of the information for the
purpose of underwriting and risk assessment it was taken manually and
the process was time taking, rigid and inefficient which resulted into
restricted penetration of insurance. Life and health are two different
branches of underwriting both need distinctive underwriting approaches
and methodology yet they are similar in some aspects both deal with
human life risk and benefits the insured whenever a contingency so arises
with regard to their life or health. Therefore it becomes necessary for the
relevant documents in regard with medical history of the insured, are
collected, various examinations and test according to company guidelines
are taken and any kind of family history is taken into account along with
his past medical records. Prudent underwriting methodology also
depends upon the actuarial data that backs its reasoning. Due to lack of
Technology and means to accumulate large number of data, it was
difficult for underwriters to create a robust system of assessing risk.
Underwriting also faced a major issue of moral and morale hazard. As the
insurance companies had Limited ways to cross check or cross examine
the information that the proposed had provided. Underwriters had to
believe the word of the proposed under good faith and act upon the
same. This was one of the reason why underwriters had low risk appetite
and sometimes deferred the risk due to uncertainty and lack of
confidence in the document so provided by the proposed.

5. When we talk in term of medical examinations that the proposed had to
undergo took a lot of time and delayed the overall process. The concept
of TPA was far fetched and few companies availed their services.
Reinsurance market had few players dominating the entire market and
dictating the terms. In life and medical underwriting the products were
few and locked to provide any personalized or customer centric
experience.
It is due to this cumbersome process the entire underwriting process
was ineffective and inefficient and result into higher operational cost
and as a result increased the premiums of the policies that was to be
borne by the ultimate customer. Due to lack of technology the
onboarding process was largely dependent on the agents on the field
who did not really understand the underwriting part of the policies and
were only keen to make higher sales, which force them to indulge into
malpractices such as forging documents, misselling etc. in order to earn
higher commission. Proposals that needed higher approvals that could
not be settled at the branch level and needed the approvals of head
offices etc. took very long to be processed. In the tradition form of
underwriting the claims and the required documents were check
manually by the insurance company largely depended upon the
documents provided to them by the insured investigation if any was to
be carried out by the respective authorities and due to inefficiency in the
process most frauds had become untraceable.
Due to lack of data Insurance Company were not able to build products
for various diseases in the medical underwriting and could not cover
various critical illnesses. Research and analytics was a time taking
process and a costly affair therefore most insurance companies did not
indulge into any kind of research in order to built new products and
simply offered vanilla policies. Hence the need of the hour was the
entire underwriting process needed an immediate overhaul to bring in
efficiency e and effectiveness in the overall process right from
identification and assessment of risk to fixation of premium, claim
processing and elimination of frauds.

6. USE OF TECHNOLOGY IN MORDEN WAY OF UNDERWRITING
IN LIFE AND MEDICAL INSURANCE
Technology has played a vital role in the insurance industry. It has brought about major
changes, it has enabled insurance companies to offer more personalized and customer
centric products. It has opened ways for prudent underwriting and open doors for robust
assessment and identification of risk. With the emergence of Technology in insurance,
products like parametric insurance and smart contracts have been possible. Fitness
bands, smart watches, smart trackers has helped life and medical insurance companies
to offer much more personalized products to those having low risk profiles. Technology
has also helped in terms of accumulation of data for better underwriting standards and
methodologies for life and medical underwriting it has open various ways to connect with
the insured, collect the relevant documents of the proposed and provide them
uninterrupted services. It also enabled underwriters to cross check and cross examine the
various documents submitted by the proposed and help reduce time and brought about
efficiency in the operations. With the emergence of Technology, insured tech companies
have evolved that are helping insurance companies by collaborating with them for
product development. Few companies are trying to build Insurtech stack that will enable
all the insurance companies to share data on a unified platform. Which can help evolve
the overall insurance industry. Technology has also played a very vital role in creating
awareness of risk mitigation tools such as insurance with Covid giving a boost to this
upsurge in adoption of Technology that was quite evident in the onboarding process
followed by the companies during the lockdown. It has fast forwarded the adoption of
technologies by the companies and opened doors for innovation and creativity.
Technology has also enabled the policies having small sum assured requiring little
underwriting to be automated and issued with the help of pre underwritten codes by
programming software. The cost of customer onboarding makes a huge part of the
premiums being paid by the proposed, with the help of technology, companies are able to
bring efficiencies in the operations as a result they are able to pass on the cost benefit in
terms of reduced premiums to the insured. Technology e has also held in smooth
integration of TPA helping these companies in the claim settlement process reducing
time and cost that was involved otherwise. Technology is also held in collection
summarisation of data helping actuaries implement law of large numbers for better and
precise actuarial calculations and assumptions.

7. With the use of AI and ML companies have been able to detect
fraud and implement robust fraud detection techniques and
tools. Technology e is also held maintain the persistency ratio
that has intern held underwriters and actuarial to make much
more prudent assumptions. With the use of Technology such as
smart band smart watches the company is a been able to offer
customer centric and personalized products offering them you
creative features at discounted premiums. Technology has also
brought about automation in the underwriting process it is
brought about a change in which Data analytics research used
to be carried out and now companies are focusing on more
research and development than ever before.
With integration of technologies in the traditional method of
selling insurance, insurance companies heve been able to
explore various others ways to sell insurance be it through
affinity channels such as selling insurance in partnership with
Amazon, Flipkart and others. It has also opened ways and
helped companies to offer micro insurance and petty Insurance
also known as toffee insurance by helping underwriters
providing relevant basis, data and information to underwrite
such risks. With the help of technology companies have now
been able to offer products apart from vanilla insurance
products and it has opened ways to experiment with new
products made the calculation of premiums easy and
assessment and identification of risk simpler.

8. WHAT FUTURE HOLDS
With everyday advancements in the technology the future has a lot to
offer for the insurance industry. Due to the low penetration in the
underdeveloped countries, it will be technology that will make a big
change in the spread of insurance. It will help underwriters to form
much more efficient underwriting standards that can cater to the
needs of many with India allowing 74% FDI in the Insurance sector we
will see surge in the Investments coming from foreign institutions and
a plethora of start-ups that are dealing in financial services will have
access to lot more resources. Using this capital will also help in
companies invest on their adoption of Technology as there are still
public sector companies that are lethargic to adapt to the new
technologies such as Life Insurance corporation of India, Oriental, New
India assurance are some of the examples of public sector insurance
companies that retain huge amount of data as they are the market
leaders having the biggest share in the market.
With advanced devices being fitted in the human body, technological
advancements in biotech will help life and medical insurance
underwriting become much more robust in assessment of human body
& health related risk. It can then able to predict the life expectancy of
an individual in a way that has never been done before. Reduced
workload on TPA and integration of a AI & ML at the enterprise level
will bring in efficiency and effectiveness in the entire underwriting
process be it in terms of claims or risk assessment. Automation in and
actuarial sciences is a challenge for the insurance companies hence
going forward taking the technological leverage we will be able to
exploit this area of the insurance industry.

9. With the help of deep machine learning companies will be able to
predict risk before it happens and suggest a suitable risk mitigation
technique to the clients. These companies will also be able to make a
much more robust fraud detection and elimination techniques by way
of integrating claim processes with technology. Deep learning can help
learn the claim process and understand human behaviour, advanced
level of which can then automatically be able to reject and assess the
validity of a claim thereby reducing the chances of fraudulent claims
occurring due to moral and morale hazard.
With the use of fitness trackers the companies will be able to
accumulate data inn regard with the health of a person the companies
can then offer hyper personalized product, that is curating product
based on the needs of the individual unlike the products that are
available today in a standard form Lack of hyper personalization is one
of the biggest gap in the insurance industry if this gap can be identified
and worked upon with the use of Technology, if the solution can be
derived, it can be a game changer for the insurance industry making
insurance a pull product from being a push product.
Therefore, it becomes important for the insurance industry to be able
to adapt to the ever-growing advancements in the technology and
integrate these technologies in the insurance products to cater to the
hyper personalize demand of the insured. With the use of data in
underwriting standards can be formulated in a manner that cater to
individual demand in a much profound manner enabling insurance to
build products from the ground up level as per the needs of the
individual. That is what the future holds for the insurance industry.

10. CONCLUSION
Keeping all the above factors into consideration we can conclude the underwriting
has come a long way from being and inefficient ineffective process that included
huge cost use time the burden of which was to be borne by the insured in terms
of premiums. It advancement it has shaped itself in a different manner that is
much more efficient and effective it has been able to somewhat provide customer
centric and personalized products although still it has a long way to go.
Underwriting methodology news overhaul keeping in pace with the advancement
in the technology. Much more robust methodology needs to be implemented so
that the standards could be framed that can then cater the prevalent gap of not
being able to provide hyper personalized product on customer to customer basis.
Underwriting standards should be such that the data so accumulated from around
the social media and other social platforms can be utilised to underwrite risk in a
manner that can both make good underwriting profits and provide good discounts
to the customers. Therefore to achieve such a kind of underwriting methodology
e there is a need that both the insurance underwriters and the professionals of
information Technology e integrate the processes together in a manner that can
complement each other.
Insurance underwriting in life and medical insurance is rather a typical process
requiring various health related documents that form part of the proposal form
which is given to the insurance company for the purpose of insurance policy. It is
the need of the Hour that this process is further streamlined and few standard
documents can be taken into consideration for the issuance of policies this will
further reduce the time taken to issue the insurance policy, resulting into process
becoming much more efficient cutting down on the irrelevant cost involved in the
current process.With the gradual and slow paced change in the insurance
industry, the subtle adoption of technology, it is safe to say that the industry will
take its time to change for better.

11. Thankyou