How Technology Is Changing the Underwriting Process

Our new Leadership Q&A series talks with the leaders of Kinetic, and sheds light on their specific areas of expertise. This edition features Vice President of Underwriting Steven Schafer. 

Steven Schafer, Vice President of Underwriting at Kinetic Insurance

We sat down with Steven, who has 20 years of workers’ comp experience and a proven track record of leading profitable insurance organizations and building regional and national programs in key industries, including hospitality, healthcare, agriculture, grocery, automotive, manufacturing and parcel. In this interview, we talked about how technology and new data sources are changing the underwriting process, and what makes Kinetic’s approach unique in the space. 

Q- You joined the Kinetic Insurance team last year as VP of Underwriting, tell us a bit about your role and your experience.

A- Joining Kinetic was really exciting because the company is pioneering what will be the future of workers’ comp insurance – a tech-driven approach that can reduce claims beyond traditional loss control methods. Over the past year I’ve had the opportunity to help develop our partnership with Nationwide, build out our amazing underwriting team, connect with our valuable broker partners, and help develop new analytic tools to improve the underwriting process. 

Before joining Kinetic, I was assistant vice president of underwriting for Pacific Compensation Insurance Company, which I helped lead to a profitable $160M prior to its acquisition by CopperPoint Insurance. I’ve also served as underwriting leader of specialty programs for EMPLOYERS Insurance. And I’m a South Carolina licensed commercial insurance agent.

Q-  What are the key components of Kinetic’s underwriting approach?

A – First, let me say that our team’s experience is really the foundation of our underwriting process. Together, we have over 55 years of underwriting and workers’ compensation experience, so we’re operating with a deep understanding of employers’ needs. We combine this expertise with a proactive, data-driven approach. Our solutions go beyond risk transfer to risk mitigation – basically, we’re focused on preventing claims before they happen. We do this by leveraging real-time data from state-of-the art wearable tech to develop custom strategies that help prevent workplace injuries. 

Q – Many insurers are upgrading their underwriting capabilities with advanced technology and expanded data sources. How is Kinetic different? 

A – We’re actually providing proven injury-reducing wearable tech to every policyholder at no charge. We’re the first ones to do this in the workers’ comp space! Our patented device uses real time feedback to help reduce the number of high risk movements workers perform on the job, which can lead to injury. And it also collects valuable data about risk. This data allows us to continually improve our underwriting accuracy and efficiency.  

Q – What kind of risk data does the tech collect, and how exactly does it improve the underwriting process?

A – Our wearable collects high risk ergonomic movement data from frontline industrial workers. This workforce faces ergonomic risks every day while performing their routine tasks –  a housekeeper overreaches while making beds, a delivery driver jumps off the back of his truck instead of using the proper three-point contact, a warehouse worker continually bends improperly to lift materials, and so on. These types of high risk movements are the leading drivers of soft tissue strain and sprain claims, which represent more than 50% of all workers’ comp claims. 

The data our device collects helps us to build better predictive models by measuring the high risk movements to claim occurrence. This ultimately leads to better risk selection and improved pricing strategy.  

Q- How is Kinetic doing, so far, with risk selection? 

A – To date we offer over 147 class codes, spread across multiple industries. We currently have a very diversified national book of business in sectors such as automotive, healthcare, hospitality, wholesale, parcel and manufacturing. And our current book of business is performing very well – our actual loss frequency is 27% lower than industry expected average. 

Q – What advantages does Kinetic’s tech-enabled and data-driven approach offer to brokers and policyholders?

A – The wealth of data we have access to makes it easier for us to offer our clients custom policies based on their specific needs, which boosts their overall satisfaction. Our policyholders also have a clear advantage from access to our free wearable tech. The device has been proven to reduce injuries by up to 60%, and the data insights it provides helps employers to make better business decisions regarding safety. As they reduce workforce injuries, they encounter fewer business interruptions, and eventually experience lower premium costs.   

We’ve had several customers who were able to make quick safety and operational adjustments based on the real time data they received from the Kinetic wearable. For example, we recently had a wholesaler that was recording a lot of high risk movements at a certain location at the same time on Saturdays. We discovered this location received their shipment of inventory every Saturday and the sorting table was exceptionally low, causing workers to improperly bend. The employer replaced the lower table with a much higher table that helped to mitigate the high risk movements. This simple correction has potentially saved this employer a lot of money in injury claims and production downtime.     

Q – What kind of pricing advantage can policyholders expect? 

A – Because we’re able to price accurately, our customers receive a competitive price on their policies. We also offer policyholders access to a dividend program that rewards them for keeping their workers safe. Eligible customers can recover up to 26% of their premium based on annual loss results.  

Q – What resources does Kinetic have access to through its Nationwide partnership that enhance underwriting efforts?

A – Nationwide provides us with access to state rating bureau portals that allow us to download historical industry data to compare with our current findings and rates. These analyses are crucial in the continued development and improvement of our underwriting strategy.   

Read the next edition of our Leadership Q&A series, where we chat with Vice President of Distribution Ronnie O’Dell, who shares key benefits of the Kinetic workers’ comp program, and answers some frequently asked questions.