The partnership will tackle underwriting inefficiencies through a combination of explainable artificial intelligence (XAI) and machine learning.
Azur, the Managing Digital Agent, has announced it has partnered with technology firm Logical Glue to implement algorithms that will enable better risk analysis, moving towards straight through processing on simpler risks. As a result, it will free underwriters to focus on more complex risks and broker relationships.
The insurance industry is renowned for its inefficiencies, with many firms sitting on a gold mine of data, but only using it for the most basic management information. In many cases, policy data is collected inconsistently and re-keyed inefficiently, with claims data often disconnected from premium data.
However, by working with Logical Glue, Azur’s augmented underwriting solution puts data at the centre of operations to allow for real-time pricing and risk management. All data is stored in one core system and then enriched by XAI at the back end to enable straight through processing and an improved user experience. Machine learning can then help underwriters improve their understanding of the risk.
The platform will integrate directly with Azur’s legacy portfolio, using an API to make better use of data. As soon as a quote is requested, the client data collected by the broker is combined with other factors outside the rating variables and then fed into three algorithms. Two scores are then returned – one on the likelihood to convert and the other on the propensity to claim. A click through button allows the underwriter to assess the logic and see how each set of characteristics has impacted the final score.
The benefits of this approach are clear. Whilst human interaction is needed to gain a good understanding of a client’s needs, technology can remove any cognitive bias from the process. Data-driven insights on the likelihood of a conversion or a claim also allow for better risk selection and management, ultimately tipping the portfolio to a more profitable position. This ability to respond quickly to changes in behaviour, competition, demand, and appetite is therefore a serious competitive advantage.
Lara Korz, Chief Data Officer of Azur, says:
“With the availability of ever more data and unlimited access to computing power via the cloud, XAI is going to become an even bigger a factor in the risk transfer process. It has taken some time for the insurance industry to enter the digital world, but technology is now influencing every aspect of this sector and will increasingly be used to create policies that are tailor-made for individual risks. Augmented underwriting gives firms the opportunity to make better decisions by comparing both assumptions and explanations. It was fantastic to work with Logical Glue to achieve this vision.”
Greg Healey, COO at Logical Glue comments:
“It has been a rewarding experience to implement our machine learning system into Azur’s legacy portfolio. We firmly believe in Azur’s vision to streamline the insurance process for brokers and clients, and this new system will allow them to make better decisions in a shorter amount of time, with less hassle for all parties involved
We’ll continue to consult and work closely with Azur to make sure the machine learning system is implemented fully and properly. Embracing digitisation in insurance is the only way to reduce the inefficiencies the sector has long been known for.”