Technology is fundamentally changing the way commercial insurance risk is underwritten. A growing number of insurance stakeholders are joining forces to bring automation and predictive insight into commercial underwriting.
Underwriting insurance risk is a time-consuming and imperfect process.
For example, as much as 40% of underwriting time is spent on administrative tasks like rekeying data or manually conducting analyses, according to McKinsey. And beyond operational inefficiencies, evolving business structures and a changing market make it uniquely challenging to underwrite risk for commercial purposes.
Given these complexities, insurance companies are looking to transform commercial insurance underwriting with software, big data, and other technological advancements. Insurtechs, for example, are already leveraging APIs, machine learning, and other algorithmic methods to improve risk assessment.
But innovation rarely happens in a vacuum, and insurtechs are partnering extensively across the insurance and tech ecosystems to improve and offer new capabilities. To augment data, manage losses, and tackle merging risks, insurtechs are forming partnerships with carriers, brokers, third-party vendors, among others.
Using CB Insights’ business relationship data, we examine major areas of partnership activity since 2019, and what that tells us about the future of underwriting commercial risk.
Data augmentation: Automating manual, error-prone tasks
Accurate data in commercial underwriting is crucial — but commercial agents and brokers frequently collect data via manual workflows and tools which are prone to error. As a result, this baseline of information is rarely complete, which can contribute to unpredictable underwriting results.