Underwriting is the core of the insurance industry. Whether a company is large or small and whether the policy covers health, life, property, or any of a range of insurable items—the process of evaluating, assuming, and pricing risk is the foundation on which insurance companies are built. For most of the insurance industry’s history, underwriting processes have relied largely on human judgement. Unfortunately, this also subjects it to human bias and error.
In underwriting, we have to ascertain risk, but we aren’t fortune tellers. It’s a given that some accounts will have claims, and some won’t—just as it’s a given that a few accounts are bound to have very expensive claims. Managing that given is where underwriters come in.
The underwriting process can be tricky, because it’s impossible to know how long the tail of loss distribution—the accounts that had the worst claims—is going to be at the outset of a policy. And how long that tail is will make a difference in the company’s bottom line—and whether the company is profitable at all. That’s why insurance companies have to manage it effectively.
When the loss distribution tail is riddled with inconsistencies, it’s a sign that problems are afoot. It’s a sign that underwriters have made mistakes, and it’s usually a sign of big problems for the company. It may signal that underwriters aren’t properly trained or have the right backgrounds. It may signal that something got missed, or that data was wrong or not validated. It may signal that exceptions were made or favors were granted, contrary to company policy or the underwriter’s best judgment. The tail can add up to 10 points to the company’s overall loss ratio, which is how insurance companies measure profitability. Those 10 points can be the difference between an average company and a great company.
At Joyn Insurance, we built a company around an underwriting approach that solves for these risks. By leveraging the latest automation, data, artificial intelligence, and machine learning technologies, we bring consistency and intelligence to the underwriting process. This eliminates underwriter mistakes, saving brokers and insureds time and money.
In addition to consistency, our underwriting processes are transparent and fast, giving brokers speed when they need it and ensuring fewer lost opportunities. If we can’t write a policy, we tell you right away, and every submission gets a response within 48 hours. We know that nothing is more frustrating than waiting for weeks just to be denied.
Insurance is all about risk. Insureds take out policies to mitigate their risk, and insurers calculate risk when writing a policy. By being smarter and consistent in how we assess and price risk, using the latest tools and technologies, Joyn offers a superior product for brokers, partners, and customers alike.