Insurance underwriting reimagined in a digitally-driven world

Edwin Theron, CEO, Sanlam Indie

Traditionally, insurance underwriting has been the one part of the life insurance offering that has seen the least innovation. This leaves lots of room for disruption since the bar has been set pretty low.

The process that insurers undergo to evaluate a client’s risk profile based on factors like their medical history, underwriting is usually a very lengthy, tedious exercise. It usually goes something like this. Once you decide on the product you want to buy, you’ll need to meet with a broker, fill out a lot of paperwork, conduct various tests, potentially repeat some steps along the way and submit more medical forms depending on your test results and, if you’re lucky, several weeks later, you’re insured. Because large, well-established insurers have to standardise much of their application processes to speak to everyone, each and every customer has to navigate this sales journey to get a policy, regardless of who they are or the type or size of cover they’re after.

In a digital environment, underwriting looks a little different. Digital underwriting makes use of emerging technologies, integrates with more services, and uses different data sources to streamline the process of signing up for a policy. It’s possible to do so because technology can automate much of the time-consuming, error-prone manual tasks and the repetitive administrative work that consumes a large portion of a typical underwriter’s day.

Because we started off as a digital business, we’ve had the opportunity to do underwriting differently; redesigning the process from the ground up. In doing so, we’ve been able to cut down the entire process – from the time a customer starts applying for a particular insurance product to the time the policy lands in their inbox – to under 10 minutes. This has been done without reducing the comprehensiveness of the product by relying on more exclusions or by charging inflated premiums.

Here are a few things we learned about how to get digital underwriting right.

Narrow your focus

For starters, we narrowed down who we were targeting. For example, unlike traditional product ranges, we were very deliberate about not trying to target everyone and not trying to be everything to everyone. In streamlining who we were going after – digitally savvy, younger, urban, first time insurance buyers – we could customise the process to speak specifically to this type of client. When you are selective about who you want to attract, your approach is far more effective than just throwing a massive net out to sea and hoping we’ll catch something good.

Avoid unnecessary jargon

As part of this, we put a lot of effort into making sure that we presented all the information along the buying journey as simply as possible. Where possible, try to use plain English and avoid insurance jargon to ensure that your clients understand exactly what they’re buying. This may seem like a simple thing, but we’ve found that content is one of the most powerful tools to make the underwriting process easier.

Do your research

We’ve also spent a lot of time doing user research and testing to see what works and what doesn’t. Everyone claims to put the client first but we have seen the value in getting real perspective from our clients rather than relying on our own insights.  A great example of this saw the team coming up with creative ways to help customers who are applying for insurance but who don’t know how tall or short they are, figure out their height. One way we suggest that people can measure their height is by standing in a doorframe – if it’s a standard door it’ll be around 2m – so they can make an estimation of their height based on this known measurement.

Integrate with other parties to streamline your processes

With our process being an entirely digital process, it’s possible for us to integrate with other sources of data on the backend so that we can verify that the information that clients share is accurate. In doing so, you mostly don’t have to send people for countless tests or ask them to fill out a ton of forms to determine if you should take them on as a client or not.

Keep the frontend in-house

While we do plug into a range of systems and APIs to control different backend processes and to integrate with different partner platforms, we have been very deliberate about how we develop our frontend, the part that the customer actually sees and interacts with, in-house.

If you look at the industry today, it’s clear that expectations have shifted. Modern consumers expect taking out an insurance policy to be as simple as signing up for a service online, which, let’s face it, is pretty simple. And going forward, these processes are only set to get smarter.

Using digital to make risk management faster and easier is a must today so that we are well positioned to tap into the technologies that will shape the industry in the future.