Insurers who replace underwriters with computers are rejecting a lot of small business applications for reasons that are unclear to the brokers, a commercial broker suggests.
“I think that insurers will start to realize that the black boxes are actually kicking out a lot of business that maybe does have a few issues, but an underwriter in the olden days used to just underwrite to those issues,” said Michael Loeters, senior vice president of commercial Insurance & Risk Management at Prolink, in a recent interview.
Loeters was referring to some insurers who are using a computer program to vet applications and the computer decides what is rejected.
When a human underwriter receives an application with some high risks, that underwriter often deals with it not by rejecting it outright, but by amending terms, adjusting the deductibles or putting some limitations on coverage, said Loeters.
“I am not sure the early machine learning and artificial intelligence technologies that are being implemented by insurers are going to have the capabilities to do that, so they are going to kick out a lot of good business,” said Loeters.
“What we are dealing with as brokers is that…
