Group CUO of Zurich on the evolution of underwriting

As a agency believer within the transformative energy of underwriting, Penny Seach (pictured), group chief underwriting officer at Zurich Insurance, is blissful to plant the flag that underwriting “is the heart and soul of an insurance organization”. There are few within the trade fairly as nicely positioned to make that declaration.

How the function of the underwriter has – and hasn’t – modified

Discussing the way forward for underwriting in a latest interview with Insurance Business, Seach explored how underwriting has – and hasn’t – modified in the midst of her profession so far.

“What has changed is the fast-moving complexity of the world around us and what we do,” she stated. “Even from a yr in the past, there may be now extra complexity. So, from an underwriting perspective, how we’re desirous about danger, understanding and digesting it continues to evolve at a really speedy tempo.

“In terms of underwriting as a career, using critical thinking skills to make an assessment, and then going through the process of underwriting and determining the right capacity and the right terms and conditions for a risk has always been key. That, in essence, hasn’t changed but the complexity of the changing world with the rapid evolution of technology offers an environment in which an underwriter can thrive.”

The impression of recent applied sciences on underwriting and underwriters

Seach highlighted how new and progressive applied sciences, together with generative AI (GenAI), are getting used to enrich the talents underwriters convey to the desk and to create new velocity and scale of decision-making. When she thinks about what retains her up at evening, she stated, it’s that intersection of focus danger and focus publicity.

The insurance coverage market is dealing with quite a few complicated dangers and the rising connectivity of those dangers, alongside the speedy evolution of expertise, she stated.  From an underwriting perspective, it’s crucial to think about what that intersection would possibly appear to be and begin to discover methods to leverage it for the advantage of insurance coverage companies and, importantly, the shoppers they serve.

“The other interesting bit is, traditionally, we’ve used historic data to be predictive of what we think future trends are going to be,” she stated. “Clearly, there’s nonetheless a spot for that however it is advisable to have an overlay of these modifications as nicely. Relying solely on historic information, you might go off the fallacious path; it is advisable to consider how issues have modified, and the place they could be headed subsequent.

“There is more uncertainty when considering forward-looking trends, but I think that we can use technology in a smarter way to help us, not to make decisions for us. We use scenarios to understand concentration risk and what that could mean for us. We can and do use AI at pace now to help us model what those scenarios could be, and gain new insights into them. Previously, you’d input the problem in and get the modelled results, whereas now, you can understand the pathway of that thinking.”

This understanding permits underwriters to suppose extra creatively about danger, Seach stated, and to discover totally different eventualities which department away from the unique drawback. This is likely one of the key methods through which she is seeing first-hand how expertise permits underwriters to interact and work together extra thoughtfully with potential areas of systemic publicity or focus danger.

Balancing short-term and long-term threats and challenges

As someone who has spent a variety of her profession concerned in legal responsibility underwriting – which is long-tail underwriting, Seach understands the fragile job of balancing real-time threats with long-term exposures.

“Every underwriter has their own perspective, of course, but as liability underwriters, we always say we’ve got the most interesting role,” she stated. “Because we take into consideration right now based mostly on what occurred yesterday and what it means for tomorrow… I feel bringing AI to that drawback assertion, lets you be extra considerate about what that intersection appears like.

“It’s easy to become overwhelmed when you’re thinking through different risk scenarios. But using AI to support your thinking can be empowering because it helps you visualize potential risks and how to manage them in different ways.”

Understanding and harnessing the total potential of GenAI

The energy of GenAI, and LLMs, equivalent to ChatGPT, from an underwriter’s perspective is much less about the way you interact along with your information, she stated, and extra about coaching your mind to ask the appropriate questions.

Seach famous that, from a Zurich perspective, the flexibility to entry and carry out superior analytics at tempo and at depth helps the underwriting course of somewhat than changing it. The aim is to entry info and supply new insights to underwriters to allow them to interact with the info and ask the appropriate questions.

“This helps us to understand our customers in a more intimate way and that, from our perspective, is what really makes the difference,” she stated. “After all, insurance is and will always be about relationships. It’s about trust, about credibility, and about how we interact with our customers.”