Why underwriters are afraid of the AI bogeyman

Artificial intelligence (AI) is touted as a way for actuaries and underwriters to be more efficient in their jobs and escape manual data entry — but most don’t believe it. And even if they did, many say they aren’t receiving the proper tech training to take full advantage of AI’s benefits.

Almost seven out of 10 underwriters and actuaries surveyed in the United States and the United Kingdom reported some level of worry they would be replaced by AI sometime during the next five years.

With 91% of insurance companies reporting they are already investing in AI technology or planning to in the next five years, 18% of underwriters and 6% of actuaries say the issue of being replaced by AI is “an urgent issue today.” Twenty-one per cent of actuaries and underwriters believe it will become urgent over the next two years.

The survey for Hyperexponential, a pricing platform for global (re)insurers, polled the opinions of 245 underwriters and 105 pricing actuaries across the UK and U.S. The respondents work in specialty and commercial insurance on behalf of Hyperexponential.

The report, Mind the Gap: 2024 State of Pricing, cites Jamie Wilson, head of pricing and innovation at Hyperexponential, discussing how AI is being used to help actuaries, not replace them.

“Actuaries who can leverage AI — which has never been easier to get started with — will find themselves coding faster, summarizing complex analyses faster, communicating more effectively, and building new tools that would have been impossible five years ago,” says Wilson. “Far from being replaced, this means actuaries can add significantly more value to the business.”

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Similar arguments are commonly heard at Canadian property and casualty insurance industry conferences.

But even if this is true, underwriters and actuaries in the survey worry they aren’t receiving the tech training they need to harness the potential benefits of AI.

“In order to successfully implement AI and machine learning, actuaries and some underwriters are likely to need modern coding skills,” the report states. “That’s why it’s such a concern that eight out of 10 actuaries report feeling worried that they don’t have the right tech skills for the future, like the application of machine learning.”

Seventy-four percent of underwriters similarly worry they don’t have the right tech skills for the future, with 16% considering the issue urgent today.

“Without focused upskilling and an emphasis on recruiting for technical talent, insurers may find themselves with the infrastructure for AI and machine learning, but without the current or incoming talent to get the most out of it,” the report states.

The survey asked how long insurance underwriters are take  to complete their daily tasks.

About 50% of underwriters in the survey said they spend more than three hours a day doing manual data entry. Just over 40% said they spend more than three hours a day re-keying data. And about 30% reported spending more than three hours a day ingesting third-party data.

What about meeting brokers? How much time do underwriters spend on that each day?

Most (roughly 40%) say they spend one to two hours a day meeting clients and brokers.

 

Feature image courtesy of iStock.com/mustafahacalaki