The AI Book

CHAPTER 23Using Artificial Intelligence in Commercial Underwriting to Drive Productivity Growth

By Hamzah Chaudhary¹

¹Director of Product Management, Cytora

Insurance is a product that has remained unchanged almost since its inception. This filters through to the way in which it is transacted today. The majority of commercial insurance is still done in person or over the phone. Although a lot of personal lines insurance (e.g. car insurance, life insurance) is now sold online in a fast and automated way, the same changes have not been adopted in commercial insurance.

There are a number of factors that play into why this should be, but the major one is that commercial risks are often seen as far more heterogeneous than personal lines, even at the smallest business level. Insurers therefore require human underwriters to be involved in understanding the true nature of the business, and to price accordingly.

However, as customer demands change, this system is no longer acceptable to the end user. As individuals, we expect fast and frictionless processes, and this is something that is currently not supported by the insurance infrastructure in place for commercial underwriting. Consumers expect all transactions to be simple and automated, regardless of whether they are buying a car insurance policy or a policy for their business. This means that commercial insurers must change how they do business to meet customer demands.

Also, underwriting decisions today are often made using incomplete ...