A report from the

Deloitte Center for Financial Services

The rise of the

exponential underwriter
Leveraging a convergence of data, technology, and
human capital to transform underwriting in insurance
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Contents

Key messages 2

The case for the exponential underwriter 3

A confluence of data and technology expected to fuel

the exponential underwriter 5

A role-based look at becoming exponential 8

Mapping the exponential underwriter journey 15

The price of inaction 18

Endnotes 19

1
The rise of the exponential underwriter

KEY MESSAGES
• To remain competitive, insurers should accelerate underwriting transformation. They can do this by automating
routine tasks and augmenting teams with emerging technologies and alternative data sources to empower
underwriting professionals to become “exponential”—more valuable than ever.

• Rather than being displaced by automation, exponential underwriters can multiply their value by gaining new
skills and transitioning to a set of enhanced responsibilities. In doing so, they can evolve into the following new
roles: technology trailblazer, data pioneer, deal-maker, portfolio optimizer, and risk detective.

• Insurers should consider upgrading four major areas in tandem—strategy and governance, data and
analytics, technology, and culture and talent. These areas are interconnected and interdependent, which
means success in the transformation journey will likely depend on making continuous advancement across
each of the four areas.

• Insurers that continue relying on traditional ways of underwriting could start a negative spiral that would be
difficult to reverse. They may face adverse risk selection, could drop off preferred lists of distribution partners,
and may have a more difficult time recruiting and retaining skilled professionals.

2
 Leveraging a convergence of data, technology, and human capital to transform underwriting in insurance

The case for the

exponential underwriter

D
RIVEN BY THE need for efficiency and competitive and facilitates more rapid adjustments
evolving customer expectations, most to underwriting strategies. Underwriters will likely
insurers have been moving steadily toward need to upgrade their tools and skill sets to thrive
greater digitization. Underwriting has been a key in this dynamic, forward-thinking world.
focus area: Most insurers have actively been
upgrading their underwriting capabilities with Second, underwriters are being asked to bring
more advanced technology and expanded more science to the art of underwriting.
data sources. Underwriting will always be partly judgment-
driven; otherwise, the role could be fully
To understand insurers’ long-term plans and to automated. Indeed, there are still gaps between
envision the future of underwriting and those rules-based underwriting and what’s actually
working in the function, we interviewed the chief happening in the market—shifts in capacity,
underwriting officers (CUOs) or equivalent emergence of new risks, and a subsequent need
business leaders of several large life and property- for coverage and price adjustments—that only a
casualty (P&C) insurers. human underwriter can manage. Underwriters
need to be able to thrive in both realms—as data
Three trends stood out that should fast-track the pioneers and technology trailblazers. They also
case for underwriting modernization. First, need to remain agile and flexible, and use their
underwriters are being challenged to move from experience and judgment to manage portfolios,
hindsight, where underwriting decisions are adapt to changing market conditions, maintain
evaluated after the fact, to foresight, where broker and client relationships, and keep coverage
portfolios are actively monitored, to understand and pricing realistic in a competitive market.
the impacts of risks added to their books of
business in real time. In the future, historical Last, but not least, the nature of risk itself is
data alone may not be enough to underwrite an changing. Underwriters will need to adapt to the
evolving set of risks, particularly in commercial evolution of risk to remain relevant and stay
lines. Take cyber insurance, for example, where competitive. With mixed-use vehicles, the lines are
threat actors are constantly evolving their tools often blurring between personal and commercial
and techniques, making rearview-mirror auto insurance. Workers’ compensation and
underwriting less than reliable. homeowners’ coverage boundaries are overlapping,
now that millions are working from home. Sensors
Meanwhile, the customers’ world is changing, are proliferating, generating huge volumes of new,
becoming more digital and interconnected via real-time data to digest and monetize. And
global supply chains. And with rapid digitization, ecosystems can evolve beyond insurance and risk
the availability of alternative and predictive data is transfer to risk mitigation and broader financial
increasing, which makes risk selection increasingly management. Insurers are working with auto

3
The rise of the exponential underwriter

DEFINITION
Ex.po.nen.tial un.der.wri.ter
Noun
New data sources and advanced technologies are expected to increasingly supplement yet also
augment human underwriters to a degree never seen before. As part of the future of work, the
exponential underwriter will leverage emerging tools, information, and skill sets to focus on higher-
level challenges and become more strategic in defining the future of the company to enhance
business performance and shareholder value.1

manufacturers to encourage safer driving using capabilities, they could be better equipped to not
factory-installed telematic sensors and working just help customers manage risk, but also provide
with cyber risk management companies to provide insight on how to avoid and prevent exposures.
comprehensive solutions beyond risk transfer.
Given these sweeping trends and shifts, what role Underwriters should be able to focus on more
can the underwriter play to ensure they (and their complex challenges, crafting custom policies faster,
products and processes) are not rendered obsolete? while improving their price-setting accuracy and
boosting customer satisfaction. Such
Achieving this transformation will not be easy or transformation should be spearheaded by the
quick. It will likely require insurers to integrate emergence of the exponential underwriter2—a
new data and technology companywide. True multiskilled professional who will take the use of
transformation could also require a shift in alternative data and advanced technology to a
organizational mindset and culture, as well as whole new level while enhancing their role and
the skill sets and roles of underwriters themselves. becoming more strategic (see sidebar, “Definition”).

As machine learning, virtual reality, and other Informed by our discussions with CUOs, as well as
digital advances increasingly automate the advanced text analytics of detailed job profiles
underwriting function, more evolved underwriters from Deloitte’s Human Capital Data Lake, this
can take advantage of technology and newly report offers insights on how insurers could take a
developed skill sets to become more valuable to structured approach to achieve this transformation
both their clients and employers. Leveraging real- and elevate the underwriter role exponentially.
time data, industry insights, and market-sensing

4
 Leveraging a convergence of data, technology, and human capital to transform underwriting in insurance

A confluence of data and

technology expected to fuel
the exponential underwriter

N
EW DATA AND technology is expected to Enabling new data
drive underwriting transformation—a sources and analysis
likelihood recognized by 200 insurance
executives from around the world surveyed for Traditionally, underwriters have utilized decades of
Deloitte’s 2021 insurance outlook. Respondents
3
static, historical information to develop rules and
cited greater use of automation, alternative data, guidelines to assess risks. However, if the relevance
and artificial intelligence (AI) as the top three of historical data diminishes over time, it may not
changes they need to make in the underwriting accurately predict future trends and exposures.
process to stay resilient through 2021 and set the This could result in poor risk selection, ambiguous
stage for growth in future years (figure 1).4 coverage language, and inaccurate pricing. For
example, relying on historical loss experience to
Together, these foundational elements will likely write natural catastrophe risks used to be
form the building blocks of any underwriting considered adequate. But it may be insufficient in
modernization program. the future: Changing climate, urbanization, and
increased asset concentration in climate-exposed
FIGURE 1
areas could significantly alter risk patterns.5
Staying resilient: The top three
alterations insurers can make to the Augmenting climate change models with curated
underwriting process content can significantly broaden risk assessment
Six-to-18-month time frame considerations. Liberty Mutual, for example,
has collaborated with Jupiter, an InsurTech that
Increase offers weather and climate analytics, to leverage
automation its data and analytics, in an effort to better meet
the risk management needs of commercial
insurance clients.6
Add alternative
data sources
In life insurance, while historical health records
would continue to be essential, insurers may get a
Increase use of more comprehensive and current assessment by
artificial intelligence tracking predictive data variables via fitness
wearables and social media.
Source: The Deloitte Center for Financial Services Global Outlook
Survey 2020.
Deloitte Insights | deloitte.com/insights

5
The rise of the exponential underwriter

Utilizing technology to Nationwide, for example, uses data extraction and

augment underwriters recognition from unstructured sources, such as
free-form text fields, to improve model input
Underwriters using legacy platforms are accuracy in real time, which is helping the
increasingly weighed down with several company make faster and better decisions.8
unproductive tasks, such as manually compiling
information from disparate sources and interfacing At the same time, solutions based on cloud-native
with multiple systems. The result is often lost architecture may enable faster IT development
productivity and higher costs. and end-to-end digital workflows, creating a
more seamless experience for underwriters.
Solutions utilizing intelligent automation, Supported by a user-friendly underwriting
including AI, can process repetitive tasks more workbench, they offer a one-stop platform to
efficiently, while freeing up underwriters’ time access, merge, and generate insights from data
and supporting them to perform more drawn from multiple sources, which streamlines
value-added tasks. processes and boosts productivity.

Automation opportunities span the entire value

chain of underwriting, from early product Reimagining the
evaluations/illustrations, to processing underwriting value chain
applications, to policy issuance. For example,
intelligent solutions can help data collection by Collectively, these enablers are giving insurers an
quickly and automatically gathering specific opportunity to reimagine the underwriting value
information related to applicants from both chain, from data intake to policy issuance (figure 2).
internal and external sites, reducing response They can help companies achieve operational
times considerably.7 excellence, meet evolving customer expectations,
and improve risk selection.
Insurers can also use a conversational AI agent to
assist communications between different With an end-to-end understanding of the value
stakeholders. Machine learning can analyze chain, underwriters have a ringside view of how
historical information from that requestor and individual improvement initiatives can build on
determine the next best action. Other AI solutions one another to ultimately realize an insurer’s
can utilize techniques, such as behavioral analytics vision of underwriting transformation. And while
and machine learning, to help identify data and technology are critical components of
misrepresentation or fraud and to improve the that vision, underwriters who master higher-level
speed and accuracy of underwriting. skill sets and roles can become indispensable.

6
 Leveraging a convergence of data, technology, and human capital to transform underwriting in insurance

FIGURE 2

Using exponential data and technology to reimagine the underwriting

value chain

Intake
• Submission extraction using optical
character recognition, text analytics,
natural language processing
• Data completion using image recognition,
third-party data, speech analytics
• Misrepresentation/fraud detection using
behavior analysis

Triaging
• Prioritization of submissions based on
traits such as likelihood to buy or be
profitable using machine learning,
recommendation engine
• Capacity management using digital
workflow tools

Risk assessment
• Automated and assisted risk assessment
and tailored product and coverage
recommendations using intelligent
rules engine, virtual assistant
• Machine learning models using
third-party and sensor data

Pricing
• Tailored pricing using advanced and
predictive analytics
• Price scenario modeling using
machine learning, data visualization,
decision support systems, “next best
action” advice

Processing
• Real-time binding, interim policy
changes, renewals, and account
management using digital workflow
tools to improve customer engagement
• Transaction close process using
virtual agents

Source: Analysis by The Deloitte Center for Financial Services and Deloitte Consulting LLP.
Deloitte Insights | deloitte.com/insights

7
The rise of the exponential underwriter

A role-based look at
becoming exponential

L
ET’S ADDRESS THE elephant in the room: David Swaim, senior director, underwriting
Professionals are often concerned that their automation at Transamerica, a large US life
employers will use emerging technologies as a insurer, believes underwriting is moving quickly
way to replace them, resulting in fears about job in this direction: “The underwriter of the future
security.9 However, this belief is likely not fully is going to look very different. They’re going to
justified as applied to underwriting transformation, have to be very targeted and focused in their
simply because with or without new technology, understanding of complex risk selection.
the buck would still stop at the underwriter’s desk. They’re going to have to be more sales focused,
selling their decisions and creating understanding
Yes, it may be true that the roles of underwriters of the decisions that they’re making while
are likely to change as a result of new data educating external distributors on the processes
and technology. Traditional activities such themselves. Additionally, underwriters have to
as data collection, risk estimation, price quoting, become much more analytically focused than
and policy issuance could take a back seat what they are currently.”
as automation takes on an increasing
proportion of the workflow for routine and Ultimately then, underwriters who embrace and
lower-complexity risks. adapt to transformation demands and enhance
their core skills and overall expertise have an
This does not mean underwriters will have no role opportunity to widen their career paths and
to play in the future of risk assessment, pricing, become champions of the technologies that will
and new business decisions. Quite the contrary. likely make their jobs easier yet more challenging
and satisfying.
As insurers move from hindsight to foresight,
underwriters are likely to play an integral part Based on our discussions with CUOs, we identified
in developing, implementing, running, and key areas in which underwriters should elevate
refining advanced data models and automation their capabilities in the near future. From this, we
solutions. They would have more time to focus on created five personas to explain the new potential
processing complex, high-value cases that require roles and how they could be cultivated (figure 3).
experience and professional judgment, and to Each role has a unique set of responsibilities,
monitor the overall profitability and strength of requiring specific skills. An underwriter could
line-of-business portfolios. And they will likely be assume one or multiple personas as per the action
tasked with interpreting, communicating, and plan of individual insurers.
defending underwriting decisions (both fully
automated and those augmented by AI) to multiple
stakeholders, while working closely with leadership
to execute strategic initiatives.

8
 Leveraging a convergence of data, technology, and human capital to transform underwriting in insurance

FIGURE 3

What will an exponential underwriter do? Understanding the five personas

Technology trailblazer Data pioneer

Key responsibilities: Key responsibilities:
• Manage the digital workflow • Collaborate with the data
• Enhance the predictive science team to help
models and align implement analytic and
assumptions to market predictive models that improve
conditions underwriting accuracy
• Collaborate with the • Understand how advanced
technology team to underwriting and pricing
continually automate models work
rule sets and test • Keep abreast of new
automation performance data sources

Deal-maker Portfolio optimizer

Key responsibilities: Key responsibilities:
• Articulate data-driven • Develop a sensing mechanism
rationales behind for real-time monitoring of the
algorithms to brokers business environment
and agents • Utilize market intelligence to
• Negotiate alternative terms implement rapid changes to
and conditions to close sales portfolios and help develop
• Identify attractive risk new products and coverages
segments and develop • Foster business partnerships
go-to-market strategies with InsurTechs, data
with producers providers, etc.

Risk detective
Key responsibilities:
• Investigate exposure probabilities at
a case level in exceptional and
complex situations and for
high-priority clients
• Develop and provide risk foresight
to clients by identifying signals that
could predict a potential risk event

Source: Analysis by The Deloitte Center for Financial Services and Deloitte Consulting LLP.
Deloitte Insights | deloitte.com/insights

9
The rise of the exponential underwriter

1. TECHNOLOGY TRAILBLAZER distributors, clients, and regulators. This

Exponential underwriters would likely be in knowledge could also be used to train front-line
charge of managing the digital workflow. underwriting peers on how to provide data-driven
They would be owners and supervisors of advice to clients. In addition, data pioneers could
automation programs, tweaking them regularly monitor model outputs and rule sets, identifying
to optimize performance and improve operational when to update rules to reflect realities of market
efficiency. As Heather Milligan, senior vice conditions and stay ahead of the competition.
president, life underwriting at Lincoln Financial
Group, explains, “Underwriters are starting to own Data pioneers should also be at the forefront of
implementation of AI programs and are driving developments in the InsurTech and data provider
automation priorities by working on rule engines space within underwriting. Working with data
and their interfaces. This progression is likely to scientists, they can scout for and experiment with
continue as real-time underwriting decisions new datasets that could help refine models in a
become more important.” cost-effective manner.

Underwriters should collaborate closely with IT Finally, as the human face for an increasingly
teams to refine underwriting platforms, automate automated underwriting function, they could also
rule sets, and test the automation’s performance. engage with regulators early in the development of
And with the emergence of no-code/low-code models and their underlying data sources. This
development platforms, such as Mendix and could create more transparency and alleviate any
Unqork, exponential underwriters will likely regulatory concerns.
become more involved in the software
development process itself, further reducing time 3. DEAL-MAKER
to market and cost. 10
As insurers increasingly use predictive models to
assess risk and price policies, underwriters will
2. DATA PIONEER likely be called upon more often to partner with
With increased use of predictive datasets, such as sales teams to explain the rationales behind their
electronic health records and pharmacy scans in decisions to agents and brokers as well as
life insurance and telematics and industrial sensor applicants. They will also likely be called upon to
data in P&C, underwriters should closely help negotiate alternative terms and conditions to
collaborate with data scientists to design, develop, close sales rather than present their determinations
and implement analytic and predictive models to as “take it or leave it” deals.
improve underwriting and pricing accuracy.
Tim Ranfranz, head of risk selection strategy at As Heather Milligan at Lincoln Financial
Northwestern Mutual, said he sees “underwriters explains, “You’ve got to get on the phone and be
working with data scientists and data engineers personable with the producer and explain why you
and helping them understand the data, how it is did what you did.”
coming in, and why we use data in the way we use
it for our traditional underwriting. I think there’s a Finally, they could also help account managers
healthy partnership there.” identify attractive risk segments and develop
go-to-market strategies with producers. In their
Data pioneer underwriters will likely need to role as a deal-maker, exponential underwriters
master how models select or price risks to ensure will also likely be tasked with cross- and
decisions are defensible to challenges from up-selling activities.

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 Leveraging a convergence of data, technology, and human capital to transform underwriting in insurance

4. PORTFOLIO OPTIMIZER business development at Northwestern Mutual.

Underwriters could also take a lead role in “That leaves the complex work for the human
developing a robust market-sensing mechanism to risk assessment.”
provide real-time monitoring of the business
environment. This market intelligence would help Risk detectives would also focus on developing and
them make rapid changes in overall risk portfolios providing exposure foresight to clients, by
in response to market trends, which should identifying signals that could predict a potential
ultimately boost profitability. event that could be avoided or at least mitigated.

“The underwriter of the future is going to be a great Finally, exponential professionals could be called
portfolio manager and will have the tools and the upon to shepherd new underwriters identified for
analytics for that and will be able to spend more this persona by sharing their tacit knowledge
time in that capacity,” said Michael Harnett, gained through experience. In fact, this knowledge
CUO, North America at Everest Insurance. “The exchange would have to be reimagined; as vanilla
underwriters with a more granular understanding cases get automated, it could be harder for new
of margin analysis and how to optimize portfolios— underwriters to acquire investigative skills on the
that’s where we are heading. And I think that’s job. Risk detectives may have to develop their own
where the industry will probably be forced to head expertise and that of their teams in different ways
in order to maximize the efficiency around capital than they do today, such as getting involved with
and capital allocation.” industry groups at a younger age and
implementing innovative apprenticeship models.
At the same time, this market intelligence could be
utilized to help develop modular products or
enhance product sophistication, which could give What is the right
companies a competitive advantage. mix of exponential
underwriter personas?
5. RISK DETECTIVE
In this role, underwriters would likely dedicate a Should insurers focus their resources more heavily
significant portion of their time to assessing on developing an underwriting workforce that
exposure probabilities at a case level in exceptional thrives as portfolio optimizers but not as much on
and complex situations and for high-priority data pioneers? Or should they be more heavily
clients. Being a risk detective would require skewed toward a workforce that thrives as deal-
underwriters to develop a deep business makers, or equally balanced across all personas?
understanding, risk assessment expertise, and
exemplary communication skills. “The complexity There is no “right” combination as needs will vary
of what [exponential underwriters] are going to do company to company. Insurers should identify the
when it comes to risk assessment will be increased, unique mix of personas that their underwriting
because that easier stuff—maybe the lower face workforce will likely require based on factors that
amount, the younger ages, the more healthy drive their underwriting strategy, such as their
population—that will be running through our lines of business, the composition of their
accelerated model or our straight-through customers, the demands of their distribution
processing,” said Erin Corrao, head of new channels, and overall market strategies.

11
The rise of the exponential underwriter

Are insurers recruiting already possess in their current roles. However, to

people who have the upskill their workforce and develop
multidimensional exponential professionals,
skills needed to become
insurers should also cultivate skills and expertise
exponential underwriters? in domains that are typically not considered
Our CUO conversations helped us uncover specific traditional to underwriting (figure 4).
skills that future underwriters would likely need to
cultivate to take on each of the exponential Have insurers actively started recruiting
personas. Many of those skills can be developed by professionals with the skills needed to become
upgrading capabilities that underwriters likely exponential underwriters?

FIGURE 4

Skills and domains needed for exponential underwriter roles

Persona Foundational skills Exponential skills

and domains and domains

• Legacy technology • Emerging technology

• Cross-functional collaboration • Intelligent automation
• Accelerated underwriting
Technology trailblazer

• Basic data analysis • Data strategy

and management
• Rating and pricing
• Advanced data analytics
• Cross-functional collaboration
Data pioneer

• Business mindset • Customer and

stakeholder management
• Cross-functional collaboration
• Leadership
• Basic data analysis
Deal-maker
• Communication skills

• Rating and pricing • Market sensing

• Risk management • Business strategy
and execution
• Portfolio management
Portfolio optimizer and analysis • Product management

• Rating and pricing • Customer and

stakeholder management
• Risk management
• Advanced financial analysis
• People development
Risk detective

Source: Analysis by The Deloitte Center for Financial Services and Deloitte Consulting LLP.
Deloitte Insights | deloitte.com/insights

12
 Leveraging a convergence of data, technology, and human capital to transform underwriting in insurance

DELOITTE’S HUMAN CAPITAL DATA LAKE ANALYSIS

To study skills sought by insurers while recruiting underwriters, we extracted more than 25,000 job
descriptions from insurance companies globally from Deloitte’s Human Capital Data Lake from 2018
to August 2020.

We then used text analytics to determine the frequency of more than 400 key phrases associated
with 28 skills of the five personas, both traditional and nontraditional, to assess industry
preparedness for exponential underwriters.

To answer this question, we performed advanced with top-notch people skills, such as collaboration,
text analytics on more than 25,000 detailed job staff development, emotional intelligence,
descriptions advertised by various global insurers and stakeholder management, which are also
over the past three years. (See sidebar, “Deloitte’s essential for an exponential underwriter.
Human Capital Data Lake analysis.”)
The biggest gap in capabilities, however, seems
Our analysis showed that most insurers are already to be in emerging data skills (data strategy
seeking several skills that would be needed in and management and advanced data analytics)
exponential underwriting roles. But it also found and new technology capabilities (intelligent
potential gaps in the skills currently being sought automation, emerging technology, and
in underwriter candidates (figure 5). accelerated underwriting).

The high level of focus on traditional underwriter At an industry level, our analysis revealed that
skills, such as basic data analysis and risk underwriters today are closer to becoming
management, are in line with future needs. There deal-makers, risk detectives, and, to some extent,
also has been heightened demand for underwriters portfolio optimizers than they are technology
trailblazers or data pioneers.

Winning the war for talent

As competition for talent intensifies, insurers

should be very intentional about their strategies
around attracting, retaining, and enabling
exponential underwriters. In particular, as
insurers try to fill the technology trailblazer and
data pioneer roles, they will be competing not
only with other insurers but also other industries
for the best talent.

Insurers should have a clear, multidimensional

human capital recruitment plan to secure
these capabilities. They should also look at
nontraditional approaches (such as alternative
workforce models) to ensure access to
hard-to-find skills.

13
The rise of the exponential underwriter

FIGURE 5

Exponential data and technology skills were least sought by the insurance
industry when recruiting new underwriters
Percentage of profiles that sought skills needed by exponential underwriters across 2018-2020

0%–20% 21%–40% 41%–60% 61%–80% 81%–100%

Foundational skills and domains Exponential skills and domains

Skills 2018 2019 2020 Skills 2018 2019 2020

Legacy Emerging
14% 16% 19% 0.3% 0.4% 0.4%
technology technology
Cross-functional Intelligent
81% 78% 77% 4% 3% 3%
Technology collaboration automation
trailblazer Accelerated
2% 2% 2%
underwriting
Basic Data strategy
37% 40% 42% 2% 2% 2%
data analysis and management
Rating Advanced
32% 24% 19% 2% 2% 3%
Data and pricing data analytics
pioneer Cross-functional
81% 78% 77%
collaboration
Customer and
Business
48% 46% 46% stakeholder 69% 64% 67%
mindset
management

Cross-functional
81% 78% 77% Leadership 14% 16% 19%
collaboration
Deal- Basic
37% 40% 42%
maker data analysis
Communication
71% 66% 67%
skills
Rating
32% 24% 19% Market sensing 17% 15% 21%
and pricing
Risk Business strategy
73% 73% 73% 29% 31% 22%
management and execution
Portfolio
optimizer Portfolio
Product
management 12% 9% 8% 4% 3% 4%
management
and analysis

Customer and
Rating
32% 24% 19% stakeholder 69% 64% 67%
and pricing
management
Risk Advanced
Risk 73% 73% 73% 34% 32% 26%
management financial analysis
detective
People
66% 65% 67%
development

Source: Analysis by The Deloitte Center for Financial Services and Deloitte Consulting LLP using data from LinkUp job
descriptions database.
Deloitte Insights | deloitte.com/insights

14
 Leveraging a convergence of data, technology, and human capital to transform underwriting in insurance

Mapping the exponential

underwriter journey

T
HE TRANSFORMATION TO exponential underwriting vision, but one which is not
underwriters will likely be a multiyear consistently understood or adopted companywide.
journey with several interconnected and Improvement initiatives tend to be one-off and
interdependent parts. Having clearly articulated siloed, limiting the ability to scale up pilots or
business objectives, stakeholder alignment, and a proofs of concept. However, with the
clear road map should be considered major implementation of some enhanced core
components to the transformation’s success. underwriting platforms, data strategy has
improved. This has augmented the capabilities
This will likely require insurers to move forward and experience of underwriters to some extent.
while synching up transformation initiatives in
four major areas: strategy and governance, data
and analytics, technology, and culture and talent
(figure 6).

Exponential underwriter
journey through
different stages
Stage 1: The insurer is aware of exponential
opportunities in underwriting but lacks a clear
vision to drive multifaceted improvement
initiatives. Most likely, underwriters need to sift
through data across disparate systems to get the
information they need, which is time consuming
and undermines their productivity and
effectiveness. Companies in this stage likely lack
the skills required in-house to launch their
exponential journey.

Stage 2: The insurer is developing some

exponential capabilities with a high-level plan
in place, but initiatives are largely implemented
in silos. They likely have an exponential

15
The rise of the exponential underwriter

FIGURE 6

The four stages of the exponential underwriter maturity model

Maturity levels
Capability Stage 1. Stage 2. Stage 3. Stage 4.
areas Aware Developing Scaling Transforming

Strategy and • Leaders are aware of • High-level goals for • Underwriting vision • Vision for
governance new opportunities underwriting are and strategic goals underwriting
Setting the but have yet to developed but not are well articulated serves as the
underwriting vision develop a vision for consistently and communicated North Star for all
and strategic goals the future of understood across • Governance initiatives
underwriting the organization structure in place • Buy-in from
to orchestrate the leadership, staff,
transformation distribution
partners, and
vendor partners
secured

Data and • Data is dispersed in • Clear data strategy • Data empowers a • Underwriter
analytics different systems, with improved data shift to risk sensing focus shifts from
Unlocking the power making it difficult integrity; portals and and prevention hindsight to
of data and analytics to use applications • Emergence of foresight
to become an • Limited reporting and standardized cognitive insights • Foresight into
insight-driven analytics capability and digitized that provide client industries
organization due to poor data • Predictive modeling recommendations and risk prevention
quality improves ability to • Vendor ecosystem is monetized into
uncover insights in place for new risk prevention
datasets services and
strategic insights
for clients

Technology • No system of • Workbench solution • Able to scale • Significant

Utilizing technology engagement to help in place to manage accelerated percentage of
to transform the underwriters manage workflow underwriting business going
customer and workflow • Integrated risk processes across through
underwriter • Underwriting assessment tools all lines accelerated
experience processes are and predictive • Technology underwriting and
bureaucratic and models to support architecture allows straight-through
time-consuming decision-making for frictionless processing.
• Increased focus exchange of • Robust
on automation information underwriting
• Automation workbench
solutions matured streamlines
across underwriting portfolio
value chain management and
integration of AI

Culture and • Significant gap in the • Improved data and • Roles and • Deliberate hiring
talent skills needed to technical fluency responsibilities of individuals who
Modernizing the become exponential among underwriters redefined to meet have traits across
underwriting underwriters • Learning and new needs exponential
workforce • Underwriters development • Organization personas
skeptical of new data programs in place design reimagined • Career paths
and technology • Targeted recruitment to match new ways redefined using
plans in place of working exponential
• Hiring balanced mix personas
of technologists, • Able to compete
strategists, and with big tech for
relationship top talent
managers

Source: Analysis by The Deloitte Center for Financial Services and Deloitte Consulting LLP.
Deloitte Insights | deloitte.com/insights

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 Leveraging a convergence of data, technology, and human capital to transform underwriting in insurance

Stage 3: The insurer is scaling exponential Maturity is tied to

initiatives with a focus on the broader vision and the weakest link
receives strong support from a highly trained and
enabled underwriting staff. The biggest difference Overall maturity will likely depend on the weakest
in this stage is that the new responsibilities link across all four areas. For example, carriers
required to develop exponential underwriters are could install the latest technologies and data
widely understood and accepted. With greater sources into their underwriting operations, but if
availability of exponential skills, carriers can start their underwriters dismiss the solutions or lack the
accelerating initiatives across the underwriting skills to generate value from those tools, they will
function, freeing up underwriters to play a more not be able to reach higher maturity stages.
multidimensional and strategic role.
Likewise, without a clear strategy, business case,
Stage 4: The insurer is transforming and and involvement from forward-thinking talent,
becoming a risk management adviser for technology and data investments will likely
customers, rather than just a steward of risk- not be appropriately focused and designed to
transfer mechanisms. In this stage, underwriters achieve sustainable business value creation.
are fully skilled to fulfill their new exponential Underwriting leaders should therefore ensure
roles. They do not feel threatened by technology— that transformation initiatives span all four areas,
rather, they trust and embrace alternative data, given their interdependent nature.
more advanced predictive models, and pricing
decisions produced by AI solutions. They can play
an active part in explaining, justifying, and refining
AI-driven decisions, creating a virtuous cycle.

Underwriters have reinvented themselves; they are

providing risk prevention services and strategic
insights to clients, thereby monetizing the insurer’s
overall risk intelligence capabilities. Companies at
this level enjoy significant differentiation from the
competition. They may not need to compromise on
pricing to win and retain business.

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The rise of the exponential underwriter

The price of inaction

A
LL OF THIS begs the question, “why now?” cycle. They could garner the most profitable
Insurers that continue to rely on traditional, business, gain loyal customers, and have a more
tried-and-true ways of underwriting, or that energized underwriting workforce that contributes
take too long to transition to a more exponential to the organization in a more strategic way—in
approach, could have much to lose in both the short, a competitive advantage that is hard
short and long term. to emulate.

Adverse selection is an increasing risk of inaction. Our global outlook survey revealed that, despite
Competitors could get ahead with wider, deeper heightened expense management pressures during
datasets, the technology to generate the most value the pandemic, most insurers are not cutting
from the data, and the talent to manage and projects and budgets across the board. Instead,
communicate it internally and externally. Before most are postponing or eliminating nonessential
long, laggards could drop off preferred lists of expenditures to free up capital so they can increase
distribution partners and see their higher-skilled investment in priority initiatives. This strategy can
talent recruited by more proactive competitors, help in creating and sustaining a nimbler
within and outside the insurance industry. This organization and talent composition that can
could create a negative spiral that would be difficult quickly adapt to continued uncertainty.
to reverse.
For the reasons outlined in this report,
On the other hand, insurers that invest in transforming the underwriting function—and
modernizing their underwriting function with new making underwriters exponentially more valuable—
data and technology, while equipping their talent should be placed on the high priority list. The tools
with exponential skills, could experience a virtuous are there. The potential is there. Now is the time.

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 Leveraging a convergence of data, technology, and human capital to transform underwriting in insurance

Endnotes

1. Deloitte, “Exponential professional: Shaping the future workforce,” accessed December 15, 2020.

2. Exponential UnderwriterTM is a trademark of Deloitte Consulting LLP.

3. Gary Shaw and Neal Baumann, 2021 insurance outlook: Accelerating recovery from the pandemic while pivoting
to thrive, Deloitte, December 3, 2020.

4. Ibid.

5. Lucia Bevere et al., Sigma: Natural catastrophes and man-made disasters in 2018: “secondary” perils on the
frontline, Swiss Re Institute, Sigma, 2019.

6. Jupiter, “Jupiter raises additional capital from Liberty Mutual, MS&AD, and SYSTEMIQ,” press release,
July 29, 2020.

7. Naresh Kothari, “Automation in the insurance industry,” NU Property & Casualty 360, December 6, 2019.

8. Deloitte interviews with chief underwriting officers (CUOs) or equivalent business leaders, August 2020.

9. Darryl Wagner and Caroline Bennet, The rise of the exponential professional, Deloitte, March 1, 2018.

10. Martin Higgins, Low-code/no-code for insurers: Overview and prominent providers, Novarica, June 2020.

Acknowledgments
The authors and coauthor Nikhil Gokhale wish to thank Prachi Ashani, Sam Friedman,
Matt Foxman, Elvar Snorrason, Ayan Bhattacharya, Rohan Amrute, and the many others
who provided insights and perspectives in the development of this report.

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The rise of the exponential underwriter

About the authors

Britton Van Dalen | [email protected]

Britton Van Dalen is a principal at Deloitte Consulting LLP and serves as the US Underwriting
Transformation leader in the Insurance practice. He brings more than 20 years of experience in the
property and casualty, life and annuity, and insurance brokerage subsectors. Within the underwriting
function, Van Dalen specializes in automation and process design, predictive model business
implementation and rules development, development of the underwriting workbench, and the
underwriting future of work.

Kelly Cusick | [email protected]

Kelly Cusick is a managing director in Deloitte Consulting LLP’s Actuarial & Insurance Solutions practice,
focused on the innovation of underwriting and product management capabilities in the property and
casualty insurance marketplace. As an actuary with experience across a variety of commercial and
specialty lines of business, she works with clients to develop and implement competitive strategies for
insurance product management and underwriting, leveraging emerging technologies and data sources,
analytical decision-making approaches, and improved business processes.

Andy Ferris | [email protected]

Andy Ferris is a managing director in the Insurance practice of Deloitte Consulting LLP, where he leads
product, risk management, and operational excellence strategies for life insurance companies. Ferris
focuses on transforming new business and underwriting operations to deliver a modern-day, digital,
omnichannel customer experience enabled by a more efficient internal operating model. His initiatives
leverage new data sources, digitization, automation, big data, predictive analytics, and related
innovations and technologies. Ferris has served on the board of directors of the Society of Actuaries,
The American Academy of Actuaries, and the Actuarial Foundation.

20
 Leveraging a convergence of data, technology, and human capital to transform underwriting in insurance

Contact us
Our insights can help you take advantage of change. If you’re looking for fresh ideas to address your
challenges, we should talk.

Industry leadership

Gary Shaw
Vice chairman and US Insurance leader | Deloitte & Touche LLP
+ 1 973 602 6659 | [email protected]

Britton Van Dalen

Principal | US Underwriting Transformation leader | Deloitte Consulting LLP
+1 212 313 2629 | [email protected]

Deloitte Center for Financial Services

Jim Eckenrode
Managing director | Deloitte Center for Financial Services | Deloitte Services LP
+1 617 585 4877 | [email protected]

Jim Eckenrode is managing director at the Deloitte Center for Financial Services, responsible for
developing and executing Deloitte’s research agenda, while providing insights to leading financial
institutions on business and technology strategy.

Sam Friedman
Senior manager | Deloitte Services LP
+ 1 212 436 5521 | [email protected]

Sam Friedman is the insurance research leader at the Deloitte Center for Financial Services.

21
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