As the enervated investment environment prods life insurers to place more emphasis on core business functions and organic growth, aged underwriting systems may be a key impediment to success.
A new report from Boston-based Celent assesses 12 new business and automated underwriting systems available to life insurers in North America. The report, authored by Karen Monks, an analyst with Celent’s Insurance Group, notes that underwriting systems have improved substantially over time.
“Once known as “black boxes” with set underwriting rules used on all cases, new business and underwriting systems have evolved into systems that tie application questions and third party data to the underwriting of specific products,” the report states. “Some systems allow for straight-through processing, and policies can be issued immediately while others give the underwriters a robust workbench filled with information for the review and ultimate disposition of a case.”
Indeed, the report found that all vendor offerings employed a high level of modern technology, such as Web-based user interfaces and user-defined rule configurations.
“The features and functionalities in the systems evaluated all help to speed policy issue and reduce costs associated with new business and underwriting processes,” Monks says. “In the increasingly competitive and uncertain life insurance market, anything that can mitigate the time and cost of issuing a policy but maintain the appropriate level of risk will provide an advantage for insurers.”
In all, Monks found 6 characteristics that define a modern system:
1) Expanded features and functionality, such as highly reflexive questioning in applications and robust underwriting work desks.
2) Improved application and underwriting integration to potentially reduce the need for third party data as a result of improved application questioning.
3) Improved data analytics that help insurers use new business experience to identify the need for rule changes.
4) Expanded use of Web services to improve integration to internal and external systems.
5) Improved configuration tools for workflow, rules engines, and processes.
6) Simplified solutions with configurable rules and algorithms.
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