Ms. Kalpana Sampat

Over the last 25 years since the privatisation of India's insurance sector, underwriting has evolved from a heavily paper-driven administrative process into a far more structured, technology-enabled and governance-oriented discipline. Earlier, underwriting relied largely on proposal forms, medical reports and customer declarations accepted in good faith. Verification mechanisms were limited and insurers depended significantly on manual scrutiny and human interpretation.

Today, underwriting has become significantly more disciplined and data driven. PAN validation, Aadhaar authentication, income verification and government database integrations have strengthened the sanctity of customer information. Cross-verification systems have reduced demographic misrepresentation and identity-related frauds, enabling insurers to take faster and more informed underwriting decisions.

At the same time, certain underwriting risks still remain difficult to eliminate entirely. Medical non-disclosures, lifestyle suppressions, or undisclosed health conditions continue to pose challenges even in today's digital ecosystem. While analytics and medical testing help identify abnormalities, insurers still depend heavily on trained underwriting judgement and human evaluation to assess complex risks accurately.

Another major evolution has been the development of sophisticated risk scoring and propensity models. These tools help insurers identify high-risk cases, early claim tendencies, lapse probabilities and suspicious behavioural patterns. Rather than treating every proposal with equal suspicion, underwriting systems today help focus resources on cases that genuinely require deeper scrutiny.

One of the most important lessons from reinsurance is understanding and operating within a clearly defined risk appetite. Every insurer has a different underwriting philosophy, capital capability and tolerance for risk. Reinsurance arrangements work best when both the insurer and reinsurer are aligned on that philosophy.

Transparency and disclosure are extremely important in reinsurance relationships. Just as insurers expect full disclosure from customers, reinsurers also expect complete transparency from insurers. A successful reinsurance arrangement is one where both parties clearly understand the nature of risks being shared, agree on underwriting standards and believe the pricing is reasonable and sustainable.

Claims management has undergone a major transformation over the years. Faster settlement expectations and digital servicing have improved customer experience, but they have also increased exposure to organised frauds and manipulated documentation.

One of the strongest safeguards against fraud continues to be a well-trained and ethically aligned sales force. The first line of defence in insurance risk management is still correct sourcing and proper customer assessment at the onboarding stage. Along with this, insurers must strengthen cross-verification systems, predictive fraud analytics and continuous risk monitoring frameworks.

The "maker-checker" culture remains highly relevant even today. The sales function acts as the "maker" of business, while underwriting and risk teams act as the "checker." Sustainable growth happens only when both sides understand and operate within the company's defined risk appetite.

Post-pandemic digitisation has increased both operational efficiency and fraud complexity. Insurers today need stronger operational governance frameworks that combine technology with human vigilance.

Cross-verification systems, demographic authentication, predictive fraud models and continuous monitoring mechanisms are becoming essential. However, technology alone cannot replace operational discipline. Fraud control also depends heavily on trained teams, quick corrective actions, strong corporate governance and minimal tolerance for fraudulent practices.

While absolute zero fraud may not be achievable, the company must aim to continuously minimise fraud risk while protecting genuine policyholders and maintaining long-term sustainability. As the fraudsters improvise continuously, insurers must also keep improvising.

Operational risk management has matured substantially over the last two decades. Modern insurers now focus not only on process gaps but also on people risk, system vulnerabilities, process leakages, audit controls and external environmental risks.

Risk Control Self-Assessments (RCSAs), process audits, verification frameworks and governance mechanisms are becoming essential pillars of operational resilience. People risk remains critical — insurers require trained teams that understand underwriting discipline, claims governance and operational accountability.

Equally important are robust systems and process controls that minimise exploitation opportunities and ensure operational consistency. Regular audits, process refinements and governance reviews help insurers strengthen resilience against both internal and external risks.

Artificial intelligence is expected to improve speed and efficiency across underwriting and claims functions, but human oversight will remain indispensable, particularly in high-risk and high-value transactions.

Analytics can identify patterns and anomalies, but contextual understanding, medical interpretation, ethical judgement and final accountability still require experienced human intervention. AI models are ultimately built, monitored and refined by humans.

One of the most common compliance gaps insurers face is treating governance and audit functions as isolated regulatory requirements rather than integrating them into operational strategy.

As IRDAI guidelines continue to evolve, insurers need stronger operational governance, documentation discipline, audit readiness and process transparency. Compliance today extends beyond statutory reporting and increasingly influences underwriting governance, outsourcing frameworks, fraud monitoring and digital operations.

Organisations that fail to align operational practices with regulatory expectations often face vulnerabilities in audit observations, documentation gaps and process inconsistencies.

One of the most important cultural shifts was ensuring that risk management is viewed as a business enabler rather than a business barrier. The sales team, underwriting function and risk teams must all understand the company's defined risk appetite and work collaboratively toward sustainable growth.

Both "maker" and "checker" functions must work together to acquire quality business that remains within the insurer's underwriting philosophy and long-term sustainability goals.

Technology provides a strong foundation for faster underwriting and better risk identification, but it cannot become the final decision-maker in complex insurance transactions. Analytics can process large volumes of data and identify anomalies quickly, but human intervention brings contextual understanding, medical interpretation, empathy and accountability into the decision-making process.

Medical professionals, underwriters and risk experts continue to play a critical role in evaluating complex cases, verifying clinical realities and ensuring fairness in underwriting outcomes.