So Much Tech, So Little Progress: We Need a Framework for Evaluating Solutions

Digital Transformation, Insurance Industry News & Views - March 15 2022

Nicholas Lamparelli is Co-Founder and Strategic Advisor at reThought Insurance, a technology-centric Managing General Agent (MGA) focused on US Commercial Flood insurance. Nick is a 20+ year insurance veteran and has worked in various capacities in the industry, including broking, underwriting and analytics. Nick is also a partner at InsNerds.com, a website dedicated to introducing millennials to the insurance industry. He is also the co-host of an insurance-related podcast called Profiles in Risk. In this article, which originally appeared in Chisel AI's inaugural Commercial Insurance Underwriting Priorities eBook, Nick makes the case for a framework for evaluating insurtech solutions to avoid wasting precious time and resources.

Insurance underwriting has come to a crossroads. The digital and information revolution that started a generation ago has now created pain points within insurance that will need to be solved yesterday. Beyond just our inability to move customary underwriting data through the ecosystem, we are now being barraged with a plethora of data we couldn’t have even envisioned two decades ago.

With the push of a button, we can determine the construction, construction quality, height and other critical property characteristics. With the push of another button, we can get critical data on who you are and the likelihood that you are the sort of risk-averse individual (or business) that will go the extra length to prevent a claim. And with still another button, we can determine how hurricanes, floods, earthquakes and fires will affect a single or a portfolio of properties. So much data, so much technology and yet so little progress.

Somewhere along the way, we have lost track of why we underwrite. If the point of underwriting is just to make a profit, then there is little impetus for us to evolve with technology, simply because the low-risk exposures and hazards are fairly easy to discern. But what if our mission is not solely tied to profit making but in being able to service the risks of a set of exposures and to do that profitably? What would we then need to align ourselves to evolve to that state?

The next generation of underwriting is already here...the technology has arrived, and it is waiting to be used. But, before we run to use this technology, the future underwriting firm must first be able to identify why it exists. Why? This isn’t just MBA theatrics. As I mentioned, we are now becoming overwhelmed with new technologies and data. Without an appropriate foundation, underwriting departments will spend countless resources and waste precious time evaluating and implementing this technology.

Nick Lamparelli LinkedIn

It starts with understanding who is the underwriting team, and what are they exceptionally good at? Then, working backwards, the underwriting team can identify who their ideal customers ought to be and how best to service them. Only at this point can the question be raised of which technologies are best to implement – not only to exceptionally service those customers, but also to do this profitably. This means creating a framework for evaluating technology and solution providers. This framework should work for every touchpoint with a customer, regulator, stakeholder and internal business operations.

Because our assets are information (bits of data) we should be asking which technologies allow us to acquire bits of information, store them, and move those bits around easily – all the while being able to make sense of them, gauge their value and assemble them into a product that maximizes the collective responsibilities to our customers, stakeholders and to the profitability that we need to justify all of this effort.

Listen to Learn More

For further insights on this and other topics, listen to the AI Wisdom podcast or read the transcript: Architecting the Underwriting Foundation of the Future with Nick Lamparelli.

Read the Underwriting Priorities eBook

For more insights on the digital evolution of commercial insurance underwriting, grab your complimentary copy of the 40-page Underwriting Priorities eBook. Thirteen industry leaders, analysts and insurtechs including AF Group, Celent, Marsh, Novarica, Strategy Meets Action, and Zurich North America discuss how the commercial lines underwriter of the not too distant future will be much more data-aware and digitally-enabled than ever before.  Read the eBook

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