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Technology could erase underwriters by 2030

  • Tech takeover: Peter Cullum, of Global Risk Partners, expects underwriters’ jobs to be increasingly done by computers

Technology could put most insurance underwriters out of a job over the next decade, says an industry expert.

Peter Cullum, founder of London-based insurance broker Global Risk Partners and an executive with five decades of insurance industry experience, believes digitisation will change the face of the industry.

In an interview in Britain’s The Telegraph newspaper, Mr Cullum said: “Insurance is one business that is all about data. It’s about numbers. It’s about the algorithms. Quite frankly, in ten years’ time, I predict that 70 per cent or 80 per cent of all underwriters will be redundant because it will be machine-driven.

“We don’t need smart people to make what I’d regard as judgmental decisions because the data will make the decision for you.”

In an insurance company, an underwriter is responsible for evaluating risks and pricing premiums appropriately. The view that this role is vulnerable to the advance of technology is not new.

An Oxford University paper entitled The future of employment: how susceptible are jobs to computerisation? by Carl Benedikt Frey and Michael Osborne, found underwriter to be among the most vulnerable roles among more than 700 jobs they studied, with a 99 per cent susceptibility rating.

The US Bureau of Labour Statistics projects a 5 per cent decline in employment of insurance underwriters from 2016 to 2026.

The prospect of computers taking over from underwriters is significant for Bermuda, as a global re/insurance hub.

The island was home to 442 underwriters in 2018, more than two thirds of them Bermudian, according to the Bermuda Government’s Employment Briefs 2019 survey. This number was up from 374 underwriters five years earlier.

They are also significant earners. The Employment Briefs 2017 report showed that underwriters had a mean gross income of about $200,000.

In an interview with The Royal Gazette last year, Laura Hay, KPMG’s global insurance leader, warned that insurers had to “digitise or die”, as they faced competition from tech-savvy rivals.

Ms Hay said insurers had access to a lot of data, but used only about one fifth of it.

“The big competitive advantage is about capturing the unstructured data, which is about understanding behaviours better, moving more towards risk prevention and data from call centres, social media and all of these areas we are nowhere near harnessing,” she said.

Ms Hay added that technology that could bring together the data with a cognitive algorithm to support underwriting decisions was already being used.

“More of this is coming in the next three to five years and the tools are already there,” Ms Hay said.