The underwriting behind most commercial insurance is a marvel of steadfast, gradual iteration. It stretches back to the 14th century, after all. In my experience running a commercial insurance brokerage for over 30 years, I encountered both the positive and the negative outcomes of an approach that is so unwavering: Reliability is what policyholders and brokers look to from insurance, first and foremost, yet it can be frustrating when new technology, major global events and market trends make the underwriting process feel out of sync with the times.
Executive Summary
Underwriters needs to adapt just like hackers adapt to exploit the latest security vulnerabilities. Here, Phil Edmundson, the founder of Corvus Insurance, explains how his firm is using smart scans of the IT infrastructure of commercial insureds to improve cyber insurance underwriting. The MGA is also leveraging sensor technology and data about transport routes to help shipping companies and their underwriters understand temperature variations and other cargo risks.Policyholders and brokers looking for a creative way to insure a new type of product or service, or a way to address a new peril, are often provided options that are wedded to old methods. Clients and brokers find they are still answering a long series of questions on a form and are still given policy terms built on a historical record of incidents and claims stretching back as far as the insurer can muster. Commercial insurers can seldom claim to be on the cutting edge.
There are understandable reasons for this slow development. It has been difficult to truly change commercial insurance because it is not a matter of simply digitizing a paper process or automating formerly human tasks, as so many other industries—including some areas of insurance—have done. Real disruption in insurance must change the way underwriting works, and that cuts to the core of a centuries-old method that has proven resilient through major shifts in human history. No small feat.
