Beyond Human: AI's Impact on Insurance Underwriting

The insurance industry is undergoing a seismic shift. No longer confined to actuarial tables and manual processes, it's embracing a future driven by data and artificial intelligence. Your next underwriting colleague might be an AI agent, capable of outperforming human counterparts in speed, accuracy, and efficiency.

AI Agents: The New Underwriting Powerhouse

AI agents are transforming the underwriting process in several key areas:

• Enhanced Risk Assessment: Leveraging advanced algorithms, AI agents can analyze vast datasets, including historical claims data, weather patterns, and emerging risks, to provide more accurate risk assessments. This empowers insurers to price policies precisely and competitively.
• Fraud Detection: AI's ability to identify patterns and anomalies in claims data makes it a formidable tool in combating insurance fraud. By detecting suspicious activities early on, insurers can protect their bottom line and maintain customer trust.
• Streamlined Operations: Routine tasks like data entry, policy generation, and document verification can be efficiently handled by AI agents, freeing up underwriters to focus on complex cases and strategic initiatives.
• Personalized Customer Experience: AI-powered chatbots and virtual assistants can provide instant responses to customer inquiries, improving satisfaction and loyalty.
• Product Innovation: By analyzing customer data and market trends, AI can help develop innovative insurance products tailored to specific customer segments.

The Future of Underwriting: Humans and AI Collaboration

While AI brings immense potential, human expertise remains indispensable. The future of underwriting lies in a collaborative model where humans and AI complement each other's strengths. Underwriters will leverage AI insights to make informed decisions, build strong customer relationships, and drive business growth.

Challenges for Insurance Leaders

Embracing AI in underwriting comes with its own set of challenges:

• Data Quality: Ensuring the accuracy and completeness of data is crucial for AI models to deliver reliable results.
• Model Explainability: Understanding how AI arrives at its conclusions is essential for building trust and complying with regulations.
• Talent Acquisition and Development: Building a workforce with the skills to effectively collaborate with AI requires investment in training and development.
• Ethical Considerations: Implementing AI in a way that is fair, unbiased, and transparent is paramount to maintaining trust with customers and regulators.
• Cybersecurity: Protecting sensitive customer data from cyber threats is a top priority in an AI-driven environment.

By addressing these challenges and embracing AI, insurance leaders can position their organizations for long-term success. The future of underwriting is bright, and those who harness the power of AI will be at the forefront of industry innovation.

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“We believe technology can help provide better customer services, which can spur growth of the real economy,” said Mark Wang, president and chief executive officer for China.

“The opening of HSBC Fintech reflects HSBC’s commitment to investing in mainland China and also our support to developing technology and innovation in the financial world.”

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Checkout.com said Tuesday that it had raised $450 million in an investment led by Tiger Global Management — which is also an investor in rival payments giant Stripe — lifting its valuation to $15 billion.

Nobody would have expected at the beginning of the year that 2020 would have been this way,” Checkout.com’s CEO and founder Guillaume Pousaz told CNBC in a November interview.

Key Points

• com said it’s raised $450 million in an investment led by Tiger Global Management.
• With a $15 billion market value, Checkout.com is now Europe’s most valuable unicorn company.
• The company plans to use the fresh cash to further expand in the U.S. and ramp up hiring.

The company still has some catching up to do when it comes to matching the valuations of its payment peers. Stripe was valued at $36 billion in its most recent private funding round, and is reportedly hoping to fetch a market value of as much as $100 billion in a new investment deal.

Europe’s top unicorn

With a $15 billion market value, Checkout.com has overtaken data center operator Global Switch as Europe’s most valuable unicorn company, and beaten “buy now, payer later” firm Klarna to become the most valuable fintech in the region, according to data from CB Insights. Unicorns are privately-held start-ups worth $1 billion or more.

If nothing else, this highlights the continued hype around the fintech sector, with investors tripping over themselves to fund companies promising to disrupt banking and payments.

A small handful of fintechs have also reached this billion-dollar milestone in record time.

This is partly dependent on external factors, like funding circumstances at the time of a capital raise. Nonetheless, comparing valuation timelines helps differentiate the herd of unicorns, and showcases where the “hype” has been most intense.

The table below reveals the 10 fastest fintechs to reach a $1bn valuation.

Unicorns are privately-held start-ups worth $1 billion or more.

Source: Data compiled by online blog, Traders of Crypto, and adapted for accuracy by Sifted

Topping the leaderboard is Brex. The startup’s 22-year-old founders took just under 2 years to grow it into a billion-dollar company.

WeFox, a German insuretech — made the top ranking; suggesting the continent still lacks the capital allocation of the US and China.

Overall, the 10 fastest fintechs all took less than 4 years to reach billion-dollar status.

It takes the average fintech unicorn 7 years to reach the $1 billion dollar mark, according to one study.

Source: CB Insights. Nearly half of all fintech unicorns are HQ’ed in the US. Europe now has 17 fintech unicorns.

To that end, late last week Equifax said it has acquired Kount, which uses AI for digital ID and fraud prevention services, for $640M; Kount becomes part of Equifax's Luminate platform

The transaction is expected to close in the first quarter, Atlanta-based Equifax said in a statement Friday. Kount’s employees will continue to be based in Boise, Idaho, and will report to Equifax’s U.S. information-solutions unit.

The credit-reporting firm has been building out its identity- and fraud-protection business for existing customers, which includes many of the world’s largest banks and telecommunications companies. With Kount, the company will begin selling those same services to e-commerce sites.

“There’s been an explosion in the last three to four years of consumers doing everything online and that’s only accelerated during Covid,” Equifax Chief Executive Officer Mark Begor said in an interview. “What comes with that is the challenge of making sure that individual who’s trying to complete that transaction, apply for that credit card, buy that product online, is really that individual.”

Many of the world’s largest retailers have seen their fraud costs balloon in recent years as hackers have increasingly set their sights on using stolen credit-card information online. Kount’s software helps retailers catch those fraudsters as well as stop hackers from taking over customer accounts.

Equifax will also be able to use Kount’s data to help its existing customers manage fraud. Kount’s network uses data from more than 17 billion unique devices and 5 billion transactions annually made across 200 countries and territories, Equifax said in the statement.

FAANG stocks

• TOTAL NUMBER OF UNICORN COMPANIES: 518
• TOTAL CUMULATIVE VALUATION: ~$1,645B

Let's review the top 50:

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Designed from the ground up to meet the unique needs of the way people live and work today, Oxygen provides flexible banking solutions to both consumers and small businesses seeking modern financial solutions. Since launching in January of 2020, Oxygen has seen tremendous growth and engagement, surpassing 125,000 accounts opened and over a 969X revenue increase. Both the consumer and small business accounts have no minimum balance or monthly fees, are FDIC insured via a partnership with The Bancorp Bank, and come with a Visa debit card that includes cashback rewards on selected everyday spending categories and merchants.

“We are humbled that our investors are putting their faith in us with this most recent round of funding,” said Hussein Ahmed, Oxygen CEO. “This investment not only validates what we’ve built but also enables us to continue pursuing our vision of building financial tools that integrate seamlessly with the digital world of today and delight our customers. We founded Oxygen because we wanted to provide financial services in the same way people interact with technology in their everyday lives. We didn’t see that and believe this led to exclusion for many. This is an important milestone, but we are just getting started.”

The first and only neobank in the US to launch with both the consumer and small business in mind, the company continues to attract investment based on its rapid growth trajectory and highly engaged customer base. From digital natives seeking a better consumer banking experience that rewards them to sole proprietors and SMBs – many of whom are first-time small businesses struggling to manage multiple, variable income streams and like the holistic business banking experience that incorporates tools like LLC creation and expense management and the ability to manage both personal and business finances from directly within the Oxygen app.

“Oxygen is the premier banking platform for today’s digital consumer,” commented Andre Bliznyuk, General Partner of Runa Capital, which led the Series A round. “Their all-in-one banking app serves both consumers and businesses, ranging from tech-savvy consumers who are just looking for a better banking experience to burgeoning entrepreneurs and small businesses looking for digital banking solutions that meet their strict requirements. It’s banking done better.”

In addition to Oxygen’s compelling product suite, the company has cultivated partnerships with top-tier companies like Visa, having joined their Fast Track program earlier this year, while simultaneously building a high-value brand designed to empower customers to “do it their way,” in support of entrepreneurship and free thinking.

Frank Strauss, longtime Deutsche Bank retail banking executive and former CEO of Deutsche Postbank Bank, who participated in the round and will act as strategic advisor, views the company as having the right solutions at the right time, seeing Oxygen as ready to take advantage of a significant market opportunity in financial services. “When I witnessed the customer engagement around the Oxygen platform, I knew immediately they were offering something truly different for consumers and small businesses,” commented Strauss. “What’s more, I’ve been struck not only by the vision but also the ability of the management team to execute quickly.”

The company plans to use the most recent funding round to scale its team, accelerate growth, and continue to build best-in-class consumer and SMB banking products.

About Oxygen

Oxygen is a modern financial platform designed for the 21st century economy – digital-natives looking for a banking partner that understands how they live and work and providing a seamless user experience for both personal and business accounts in a way that makes them feel in their element. Available on iOS and Android, Oxygen users enjoy no monthly fees, no paperwork, early direct deposit, simple transfers, and cashback rewards on everyday purchases from approved merchants. Businesses can easily control their finances with solutions that are elegant, simple and secure. Reject ordinary. Banking for the Extraordinary.

Overcoming these obstacles and consolidating your assets, including the product and brand, can always feel easier when your co-workers are committed to the success of your venture startup. So how do you manage this, when you’re on a tight budget? When you’re planning your team expansion in 2021, here 10 points to consider, especially in industries where head count means growth and adoption of your corporate culture.

1. Reduce interview related costs

In a selective process, you need to filter sometimes hundreds of CVs to end up with a group of ‘interview material’ candidates. In the times of the pandemic, interviewing in the office can be complicated and expensive. Interviewing by video call is the new way of doing the job and many of those apps are free, like Skype, Facetime, Whatsapp or Zoom in their basic versions. You should also think about how everyone’s time in the review process, and whether this can be scaled, or combined with other related tasks.

2. Target highly-focused, but undervalued, professionals

You do not need to have only university graduates in your company. People with some experience in some software or who have already developed some of the skills you’re looking for are usually good at taking challenges positively and solving unexpected issues in a pro-active manner.

3. Hire freelancers

Within ten years, freelance workers may represent more than 50% of the U.S. working population. What are the implications for corporates and corporate cultures?

In the United Kingdom, France and the Netherlands, freelance growth has outpaced overall employment growth. The number of freelancers in the European Union (EU-28) doubled between 2000 and 2014, making them the fastest growing group in the EU labor market, according to the Association of Independent Professionals and the Self-Employed (IPSE).

A similar trend is underway in the U.S. “In the United States, the freelance workforce has grown three times faster than the overall workforce,” says Jessica Alsford, the firm’s head of Global Sustainability Research. “Freelancers now represent 35% of the total U.S. working population and could represent more than half of the nation's workforce by 2027.”

Freelancer marketplaces like Fiverr, Upwork and Guru can help you find high quality professionals to manage specific projects, with the possibility of always hiring them in permanently later.  Software testing, programming, graphic design, accounting, marketing, sales, and support – there are a plethora of experienced professionals with usually lower rates than your own local market.

4. Expose your brand and increase web visibility using digital

People who are looking forward to working in your company have access to your website, your social media accounts and your team posts and articles online. They may have a sense of your startup culture before they ever set foot in your company for work. Communicating the values of your startup and publishing your vision for your market is a good way to attract interested professionals who might consider working for you. The message you are getting across on your online channels must be accurate as to your day-to-day and what you aspire to be as a startup. A sense of purpose can only help you connect with your future team members and employees.

5. Ask your co-founders and employees

When you have projects to deliver and a short time to find people with the right skills and energy for the job, you will regret not having an employee referral program. In most companies I’ve worked for, employee referrals are a common place. The clear advantage is that your employee already knows the person he/she is referring to the startup and this recommendation saves a lot of time and money. Besides, studies show that a candidate referred by an employee is more prone to accept the job and is likely to stay longer.

6. Have a full working plan for remote work

With reduced commuting time and cost for the applicant,  a remote work plan can be more attractive. Working remotely at least part of the week is advantageous to employees who can spend more time with their families and who do not need lots of physical interaction with the team. Situations like the pandemic and the acceleration of digital transformation in 2020 have made startups and companies alike re-think their remote work plans and made them more flexible about it.

7. Make your startup vision clear to reduce churn

Who are the candidates in your selection process that really believe in your vision and purpose? Employees who can see similarities between what you are doing and what they are doing or intend to, are the employees who will likely be more committed to the cause, stick around in periods of crisis and be less likely to leave, incurring another hiring process.

8. Look for part-time employees, whenever possible

Bringing part-time employees to the company has lots of advantages. One idea could be to target employees in other countries who have the skills and could start remotely working immediately for your company until both of you decide it is time to commit, personally and professionally.

9. Use your professional network to identify possible candidates, faster

whether you’re on LinkedIn, XING or another network, this will make the process smoother, easier and more cost effective. Spread the word that you are hiring and usually, your network pals will recommend a candidate.

10. Offer other job perks/benefits

Employees value benefits when applying for a job. Offering experiences such as workshops, educational webinars and team building activities, are awesome and build loyalty.

In summary, hiring and onboarding new team members can be time consuming and costly to the company. If you reach out through your personal and professional networks, consider part-time and remote options, carefully measure who is involved in the hiring process from your startup’s side, and make sure the chosen candidate is a good fit.

London will become the new company headquarters, and with $2 million in seed funding from Startup Wise Guys and OTB Ventures, the company plans to continue meeting the growing needs of a digitized economy. Ondato’s annual revenue grew threefold in 2020 and due to this, the company has over 150 clients across 24 countries ranging from gig economy startups to major corporate banks, reports UK Tech News. Ondato’s industries served already span fintech, medical and gaming.

Ondato provides a complete compliance management solution which includes biometric photo and live video identity verification, data monitoring, screening, risk scoring and case management on a unified platform. The solution performs 3D biometric mapping of an individual for identification, which provides high-level accuracy. Other use cases include client onboarding, document legitimacy verification and age verification.

The company attributes its growth to the impact of COVID-19 in the changing platforms across industries such as transport, food delivery, online commerce, consumer services and KYC compliance.

“We see huge potential for Ondato in this vast market for user identity and compliance. Ondato is already a vastly international business, and I look forward to seeing its global footprint expand further,” says Adam Niewinski, managing partner at OTB Ventures.

Ondato also raised more than $500 thousand in mid-2020 to bring its selfie biometrics to the Polish and German markets.

From Katya Pivcevic

Katya Pivcevic is a graduate based in Brussels, Belgium working for a think-tank on the current refugee crisis in Europe. She has a master’s degree from King's College London in the field of human rights, and through this has expanded her interests to the growing area of emerging technology in border management.

Ondato, founded in 2016, is developing remote KYC and compliance solutions, which help identify both private individuals and legal entities, review data registers and fully authenticate the client in line with the highest security and reliability requirements. In 2019, Ondato was recognised as the fintech company of the year at the German-Lithuanian Business Awards, and was among the Top 10 Scale Ups in Eastern Europe.

The startup is currently offering services to both traditional finance institutions and to private financial technology companies operating or interested in operating in cyberspace. In the face of COVID-19, Ondato has adapted the technologies it is developing for use in insurance companies, the attorney segment and state institutions, helping them continue to provide services during the pandemic.

Ondato is currently placing significant emphasis on money laundering and prevention, as well as developing its client authentication compliance management platform, which helps financial institutions and other organisations match more than 15 different requirements. This further manages client information and periodically checks it, creating reports and other processes necessary for financial institutions.

Ondato founder and head Liudas Kanapienis assures that the new investment will contribute to even greater technological development, and entry into the Polish and German markets.

“The Startup Wise Guys accelerator fund will grant our startup the opportunity to grow even faster and expand into other countries. We are already one of the leading KYC platforms in the Baltic States, we are trusted and our services are already used by the largest banks such as Luminor, SEB, Swedbank, other financial and insurance companies and various startups,” said founder Kanapienis.

Dmirtrij Sosunov, partner at the Startup Wise Guys accelerator fund, has commented that before the arrival of the pandemic KYC solutions were already a key part of all businesses, and in the face of COVID-19, the need to supply services in electronic space and suitably identify one’s clients has been even further emphasised.

Sosunov went on: “The decision to invest was based on the Ondato team, which has vast experience in the fintech domain and which does not limit itself to successfully operating in the Baltic States, seriously aiming for the global market. We see that Ondato is unafraid to innovate and offers its clients new products which resolve key and expensive problems related to client verification and compliance (KYC and AML)”.