Technology Can Create a New Breed of Underwriters

Below is a great article about technology's inevitable impact on underwriting.  The article was published on May 16th by Property Casualty 360.  Enjoy! 

MAY 16, 2016 | BY TONY CID

An exciting new frontier of improved customer service and profitability is emerging in the Property and Casualty insurance industry — that of underwriting.

Where historically an underwriter’s job has been viewed as one of accepting or rejecting risks and also one of creating a homogenous portfolio of risks, we are witnessing the emergence of a new breed of underwriters because the advent of new technology. This new class of underwriters is leading the change in revolutionizing the insurance business and better equipped to handle risk management.

Technology holds the key to the shifting sands of market dynamics in the industry. We are surrounded by a combination of market forces that are moving customer expectations. There is a greater number of millennials joining the workforce, customers’ preferences and expectations are being reshaped and sharpened by providers such as Facebook, Amazon, Alibaba and Seamless. Even our transportation is becoming on-demand with providers such as Uber and Lyft. Money is being increasingly digitalized. In such a stimulating and progressive environment going through a great amount of flux, the nature of risk assessment and selection must address not only internal requirements, but those of the insured and the agent.

Status quo in underwriting

In conventional underwriting, agents send in their applications to an underwriting contact within the carrier’s organization.

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The underwriter receives the applications in a paper-based and mostly manual environment. The underwriting process is cumbersome, with the underwriter spending a considerable amount of time in researching the risk and populating data subsequently in an internal system. This stage commonly involves a lot of navigation back and forth through non-regularized systems such as e-mails and legacy systems, such as policy administration.The underwriter is left with little bandwidth in closely examining, quoting and optimally pricing the risk.As an industry, there is an overwhelming need for technology to create fluid connections among the various stakeholders in the insurance process.The technology must include robust analytical capabilities that free the underwriter to address customer and agent needs as well as ensure appropriate risk pricing and positioning. A cohesive technology that spans across agent portal, policy and claims systems, document management and e-mail, to predictive models, analytics, business intelligence tools, and a variety of data services.The application must also take into account the interconnected nature of the process and should bring in workflow capabilities to move tasks from agents to underwriters seamlessly. Empowered by technology, the underwriting staff can expand their view of risk by working with agents in real time to better manage their risk. Agents also have a window into the missing information about risks and exposures, and can remove obstacles the application process encounters. On the whole, we need to increase the ease of doing business between the carriers and the agents to better serve the insured.

Technology as a differentiator

As an industry, we have focused the underwriter’s role around receiving data that comes from the producer, checking to make sure the data is accurate and determining based upon the data, whether the risk is acceptable or not.

In addition, underwriters must assess whether the risk is even a risk that they would like to write. Technology has progressed to the extent that a volume of the risks that the carrier organization is screening can be underwritten through rules-driven profiling and straight-through processing. Carriers can take on the risks suited to their appetite by setting pre-qualification and eligibility rules. This helps build a better book of business and positively impacts profitability.

The present underwriting ecosystem is burdened with a policy-centric view of customers, leading to not meeting customer expectations of a seamless interaction with companies. The process must become customer-centric. Modern technology perfectively positioned should provide a single view of the insured’s account across the enterprise, lines of business, policy systems and devices. Applying these capabilities enables the underwriter to focus on increased agent efficiency and meeting customer expectations while better analyzing and pricing every risk.

Why is this necessary?

These new applications are rich in the sources of data available to the underwriter, which will increase the underwriter’s effectiveness and help them better manage their risk by reducing the amount of time spent searching through various data sources.Standardizing the data used by the underwriters, embedding consistent rules throughout the organization and allowing underwriting knowledge to be codified and maintained will provide a single source of truth for the organization. As importantly, underwriters will  be able to identify cross sell and upsell opportunities across lines of business. In general, these applications will allow the underwriter to be more surgical in their approach to the business and generate loss ratios that will outperform the industry.

Underwriting is one of the few bastions left to fully leverage and use technology to the fullest. Given the current competitive landscape, it is essential that available technology be applied to the greatest extent to accurately price risks, create stronger relationships with agents and better serve customers.Tony Cid is global head of commercial insurance at Jersey City, N.J.-based insurance software company Intellect SEEC. 

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