Core insurance workflows
Insurance runs on a handful of document-heavy workflows: underwriting a risk, working a claim from first notice to settlement, and the actuarial work that prices and reserves for it all. Here's how that work gets done — step by step — and where AI fits. It's the same work InsureBench measures models on.
Underwriting
The decision process by which an insurer evaluates a risk, decides whether to accept it, and at what price. The Insurance Information Institute defines it as "examining, accepting, or rejecting insurance risks, and classifying the ones accepted, in order to charge appropriate premiums."1
Submission & intake
Applicant or broker submits the risk, exposure, and loss history.
Risk assessment
Analyse the submission; pull data, scores, inspection/medical reports.
Apply guidelines
Check appetite, limits, and authority; sort into a risk class.
Pricing & rating
Apply rate factors to set a premium adequate for expected losses.
Accept / decline / refer
Decide, possibly with terms and exclusions, or escalate.
Quote & bind
Issue a quote; a binder gives temporary cover once accepted.
Policy issuance
Produce the formal contract, superseding the binder.
Personal vs. commercial: personal lines (auto, home) are high-volume and rules-based, so clean cases process straight through; commercial lines are document-heavy and judgement-based, with senior underwriters reserved for complex accounts.2
Underwriters spend ~40% of their time on administration and ~30% on sales support — leaving only about 30% for underwriting itself.
Accenture P&C Underwriting Survey3 · McKinsey projects >90% of simple-lines underwriting automated by 20304See the underwriting AI benchmark for how InsureBench scores models on this work.
The claims lifecycle
A claim runs from the first report of a loss to final settlement and recovery. A claims adjuster "investigates, evaluates, and settles claims," determining whether the policy covers the loss and how much the insurer should pay.5
FNOL
First Notice of Loss is reported, triggering the process.
Registration & triage
Log the claim, categorise by severity, assign an adjuster.
Coverage verification
Confirm cover, limits, deductibles, and exclusions.
Investigation
Assess damage, liability, and possible fraud.
Reserving
Set a case reserve for the expected payout.
Settlement
Determine the payable value; approve, partially pay, or deny.
Subrogation
Recover from liable third parties and salvage.
Closure
Settle and close the file; audit later for leakage.
Where AI fits today. McKinsey estimates more than half of claims activities could be automated by 2030, with loss-adjustment expenses falling 25–30% through digitisation.6 On fraud, Deloitte projects AI could save P&C insurers $80–160 billion by 2032, against annual P&C fraud losses of roughly $122 billion.7 See the claims AI benchmark.
Actuarial work
Actuaries price risk, set reserves, and model capital. The work splits into three areas, each governed by standard, named methods.
Setting the rate
Built from the pure premium method (loss per exposure unit, loaded for expenses and profit) or the loss ratio method, with frequency×severity analysis, trending, and credibility weighting. GLMs are the industry-standard multivariate technique.8
Estimating ultimates
Losses are arranged in a development triangle and projected to ultimate via the chain-ladder method, the expected-loss-ratio method, or the Bornhuetter-Ferguson blend — producing the reserve for claims incurred but not reported (IBNR).9
Where AI fits today. Machine-learning methods (gradient boosting, neural nets) increasingly complement GLMs by capturing non-linearities, while GLMs remain the explainability and regulatory baseline.12 See the actuarial AI benchmark.
Key terms
FNOL
First Notice of Loss — the initial report that triggers the claims lifecycle.
Combined ratio
Loss ratio + expense ratio. Below 100% is an underwriting profit; above 100% a loss.
IBNR
Incurred But Not Reported — reserves for losses that have happened but aren't yet reported or developed.
Development triangle
Cumulative losses by accident period against development age, used to project ultimates.
Chain-ladder
Reserving method projecting ultimates via age-to-age development factors.
Subrogation
The insurer's right, after paying a loss, to recover from a liable third party.
Binder
A legal agreement giving temporary evidence of insurance until the policy issues.
Endorsement
An amendment (rider) that adds, deletes, excludes, or changes coverage.
Sources
- Insurance Information Institute — Glossary: Underwriting. iii.org
- McKinsey — Redefining excellence in P&C underwriting (2021). mckinsey.com
- Accenture — Why underwriters don't underwrite much (Feb 2022). accenture.com
- McKinsey — Insurance 2030: the impact of AI (Apr 2018). mckinsey.com
- U.S. Bureau of Labor Statistics — Claims Adjusters (OOH). bls.gov
- McKinsey — Claims 2030: dream or reality? mckinsey.com
- Deloitte — Using AI to fight insurance fraud (Apr 2025). deloitte.com
- Casualty Actuarial Society — Basic Ratemaking (5th ed.). casact.org
- Bornhuetter & Ferguson — The BF reserving method. reference
- NAIC — Risk-Based Capital. naic.org
- Swiss Re Institute — sigma 1/2025, natural catastrophes. swissre.com
- Society of Actuaries — P&C pricing in the age of ML (Jan 2024). soa.org