Increasing automation is revolutionising the underwriting industry, but the human touch remains vital, according to a new Suncorp white paper.

“Many insurance services have been automated to various degrees recently, including distribution, claims and broking,” the report says. “Of all the insurance services, however, it is underwriting that has been most affected by digital automation.”

Many risk-selection and pricing tasks can be handled by automated systems, leaving some staff questioning the future relevance of their roles.

Suncorp says human judgement and intuition, and the art of underwriting, is as important as ever. But there is no doubt technology will “dramatically reconfigure the underwriting workforce”.

With entry-level tasks now automated, where will younger staff members build the skills required for more complex risks?

EGM Commercial Portfolio Darren O’Connell, author of the paper, told insuranceNEWS.com.au the right education and training is vital.

“One way is to adjust the traditional underwriting career pathway to incorporate rotations in other disciplines, such as claims and distribution,” he said.

“Many claims and distribution employees will develop a strong understanding of products. Young underwriters could spend time in these teams as a ‘risk apprenticeship’.”

Mr O’Connell warns underwriters could easily become over-reliant on technology, and not have the expertise or confidence to make decisions.

“This could lead to mistakes and missed opportunities, which will have a serious impact on an insurance business.

“Some risks may appear to fit within the business’ risk appetite based on data modelling, but an experienced underwriter may spot something that causes concern.

“Without this judgement, bad risks could be mistakenly covered.”

Mr O’Connell says insurers should look to capture as much of the older generation’s knowledge as possible before they retire.

“The industry should look to harness their knowledge and experience and pass it on to the next generation. For example, you could establish mentoring programs for recruits and experienced underwriters.”

There is no doubt digital advancements will disrupt current working practices.

But automation and data modelling should be embraced, not feared, as they stand to bring huge benefits, and will not replace the human element.

“The future is far from bleak,” the report concludes. “Humans, not machines, will continue to play a vital role in driving the performance of insurance businesses for some time to come.”