Digitizing the underwriting decision making to help our clients grow
Global investment in insurtechs is very strong. Insurers, MGAs, and wholesale brokers are continually striving to grow their business and maintain profitability, while addressing an increasing demand to compete with the better customer experience offered by these insurtech competitors. According to Accenture, 86% of insurers believe innovation must happen at an increasingly rapid pace to retain their competitive edge1. They must find ways to work more efficiently and reduce expenses, while providing faster, better service to their clients.
To grow their business, incumbents in the insurance industry will need to hire specialized talent who would be able to underwrite the business while looking to platform providers or insurtech startups to digitally support, or improve, their business processes. While this requires substantial investments in people and technology infrastructure, the industry is being faced with a talent gap.
Munich Re identified this as a challenge and looked to empower its clients and partners (primary insurers, MGAs, and wholesale brokers) to leverage the opportunities of digitization and address changing consumer expectations. Munich Re’s underwriting engine team sought to offer a better user experience for our partners and help them profitably grow their portfolios. The first version of the solution was deployed in the United States early 2019 and just expanded into the European market. A focus on automation and machine learning algorithms, paired with a deep understanding of how to apply them in the insurance space, has underpinned the success of the product. Underwriting year 2021 is shaping up to be the most profitable to date, and growth in 2022 is expected to double the current size of the portfolio.
Partnering with our clients
Successfully building this innovative technology required the combination of several assets of Munich Re:
- its trusted relationships with clients,
- global innovation capabilities,
- its expertise for natural catastrophe risk,
- and the support of traditional business units.
With this powerful combination, a mindset of co-creation with clients and a highly committed team, Munich Re developed a solution sought after by our clients and which we believe is contributing to the evolution of insurance. The team developed an underwriting engine that simplifies and accelerates the underwriting process and is bundling this technology with Munich Re’s (re)insurance capacity.
Munich Re’s underwriting engine uses Munich Re’s proprietary models and enhances traditional actuarial models with machine learning models. It automates the underwriting process and makes this decision consumable via (RESTful) API calls, which ease the integration into client systems.
The underwriting engine difference
Munich Re’s underwriting engine should not be mistaken with traditional policy administration systems, which have a wide scope and enormous capabilities to cover the needs of the whole value chain. The “Engine” instead is laser-focused on the underwriting decision making and strives for an easy integration of this decision making into the value chain.
Using Munich Re’s underwriting engine allows our partners and clients to expand into new markets and profitably grow their business supported by digitally augmented underwriting decisions. This gives our clients and partners the opportunity to concentrate on enhancing their sales and distribution capabilities when expanding their business.
The partnership between clients, Munich Re’s global innovation community, and business units allowed the “Engine” team to identify a problem, transition an MVP (minimum viable product) into a product, and help transform the product into a successful business model. This structured approach to innovation enables market-leading capabilities and deepens Munich Re’s relationships with our clients and their insureds.
Together with our clients, we are continuing to explore new opportunities to share risk and successes along the innovation journey toward digitalizing insurance to empower success and growth.
Learn more about innovation at Munich Re.
1 Accenture. The rise of insurtech. https://www.accenture.com/us-en/insights/insurance/rise-insurtech. January 2, 2019.