The Challenge
In the dynamic landscape of specialty insurance, characterized by unique risks and tailored coverage, companies strive to innovate and adapt to evolving market demands. In this context, a prominent US-based organization prioritizes proficiency in underwriting management and wholesale brokerage services.
Operating under its umbrella, a cyber insurance company focuses on refining underwriting processes to stay competitive. Their CEO encountered challenges with their underwriting process. Historically, the approach heavily relied on manual research of extensive unstructured data by seasoned specialists to make underwriting decisions. However, this process lacked scalability due to a shortage of experienced underwriters in the cyber insurance domain.
They have undertaken internal initiatives and engaged consulting services to modernize and enhance efficiency. The CEO articulated a vision for the goal, “It’s about organizing and creating structure to ultimately then be able to make best or more informed underwriting decisions.” However, the in-house tool proved insufficient for their needs due to two factors:
- Stagnant databases - Relying on outdated information, the tool led to discrepancies between technical premiums and market quotes. Consequently, the insurer struggled to accurately assess underlying risks and calculate the necessary capital to bolster their portfolio with reinsurers.
- Disparate systems - Additionally, the client encountered further challenges as the cybersecurity scores from external vendors were not integrated into their underwriting process.
To enhance productivity, scalability, and objectivity in their underwriting process, the company looked for an external partner. They needed an in-house quantitative and qualitative model capable of accurately calculating potential maximum losses and specific underwriting metrics. Despite our lack of previous experience in the cyber insurance domain, the cyber insurance firm selected us due to our demonstrated capabilities in creating capital models for financial institutions, as well as our drive to innovate. To address the challenges faced by the client, Evalueserve employed the 'D3™ - Diagnose, Design, and Delivery' framework.
Our Solution
Recognizing the necessity for a highly customized solution tailored to the client’s unique needs, Evalueserve initiated a series of workshops with the company’s CEO and their team. As a result, we determined that the most effective solution would involve employing a consultative approach and leveraging our adjacent expertise and technology-enhanced services to create and deploy a web-based application. Though there were some trial-and-error moments, we needed to gain a thorough understanding of their requirements. We approached it as a learning process we were fully committed to.
Through this comprehensive assessment, we identified the areas where the client experienced gaps:
- Dealing with extensive unstructured data
- Incorporating external data sources in the underwriting process
- Quantitative loss-based modeling for accurate risk assessment
- Scaling processes to handle over 160 underwriting parameters
- Having a single view to assist underwriters in consolidating quantitative and qualitative data for decision-making
To address these challenges, we formed a team of subject matter experts with skills in:
- Risk modeling, operations, risk assessment, and data analysis, providing comprehensive insights into risk exposure.
- Technical development, including cloud development skills, to transition prototypes into fully functional web applications.
- UI/UX design, ensuring an intuitive and engaging user experience.
After assembling the team, we conducted proactive experimentation to explore the incorporation of generative AI to streamline the process. We hypothesized and tested various models and configurations to determine the optimal approach for the client’s needs. Throughout each stage of the experiment, we provided updates on the progress and outcome metrics, fostering transparency and building trust with the client.
To ensure our solution effectively targets every crucial aspect requiring enhancement, we chose to implement it in phases. These phases included:
- Exploring and standardizing internal and external data
- Crafting models for the EP curves
- Designing scorecard models
- Integrating GenAi features
- Developing the dashboard
Each phase was stage-gated, allowing us to ensure alignment with the client’s expectations at every step. If necessary, we iterated to refine the solution.
We developed a standardized and holistic approach to underwriting by creating an innovative probability-based model, which now serves as the foundation of the web application we delivered. This model, adopted company-wide, evaluates the likelihood of events and the potential severity of losses within an industry, guiding underwriting decisions within a specific probability range. By incorporating a probability curve, our approach offers a more comprehensive and accurate assessment by considering a wider range of factors at both the industry and company levels.
The application integrates a quantitative model for benchmarking company risk against industry standards and a scorecard model that assigns a risk score based on predefined cyber risk drivers. To further enhance the scorecard model, we integrated GenAI features into the web application. This functionality enables rapid risk assessment by automatically generating responses to the questionnaire within 15 minutes, leveraging pre-standardized input data. Our solution provides underwriters with a structured platform for effective assessments, featuring tools like business interruption and data breach calculators, underwriting metrics, and EP curves for in-depth risk analysis. The application also offers significant customization at the underwriter level, enhancing user experience and flexibility.
Throughout the development process, we prioritized the security of the client’s data, especially concerning the implementation of large language models (LLMs). Through meticulous architecture design and deployment techniques, we ensured that all data remained within the client’s environment, minimizing liability, and strengthening security measures. Furthermore, we enhanced data protection measures, providing an additional layer of security. This comprehensive approach to data security underscores our commitment to safeguarding sensitive information and ensuring peace of mind for our clients.
"It's about organizing and creating structure to ultimately then be able to make best or more informed underwriting decisions with. (...) The proactiveness in trying to enhance our capabilities was tremendous and is on a great trajectory track today."
Business Impact
Our solution provided the client with a standardized and holistic approach to the underwriting process. Implementing the web-based application led to significant time savings for the cyber insurance company. Tasks that previously demanded days of manual research can now be completed in just 10 to 15 minutes using the tool, representing a substantial boost in efficiency.
Furthermore, the entire process is streamlined and technologically enhanced, ensuring accuracy. The application empowers underwriters by providing:
- Accurate calculation of risk and capital impact.
- Assistance in comparing the loss-based approach with technical premiums.
- A comprehensive 360-degree view of the company to be underwritten.
- A dashboard serving as a centralized hub for accessing all data (loss, financial, and previous underwriting) in one place.
Despite all the automation, we ensured that the ultimate decision stayed in the hands of the experts. Additionally, the tool serves to enable underwriters by offering suggestions and recommendations derived from extracted document information through the GenAI feature. While the tool generates outputs from models, underwriters maintain the ability to validate and override these outputs based on their expertise and research. This ensures the accuracy and relevance of assessments, providing underwriters with greater control and confidence in their decision-making processes.
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Get in touch today to find out about how Evalueserve can help you improve your processes, making you better, faster and more efficient.
Overview & Impact
Evalueserve's web-based application revolutionizes the underwriting process for a leading US cyber insurance provider, reducing days of manual research to 10 to 15 minutes.
- Hours Saved on Manual Research
- Improvement in Data Accuracy
