Profitable growth may seem an elusive target for insurers coming out of a battered economy, but according to a new research report, carriers are willing to invest in some of the technologies and processes necessary to meet financial performance goals.
In particular, notes a report issued by SMA, there is an increase in the interest level for underwriting automation to improve ease of doing business with agents, improve workload management and help facilitate better underwriting decisions.
“The overarching, primary goal of underwriting automation is to improve workload management and make better underwriting decisions—not to replace professional underwriters,” notes Deb Smallwood, SMA founder and author of the report.
Underwriters themselves say they are open to underwriting automation. “The greatest overall resistance factors involve IT platform constraints and internal cultural resistance, likely in part due to the perception that a high level of investment is required to increase automation of underwriting,” says Smallwood.
Other widely held notions that can be considered “myths” affecting the adoption of underwriting automation: The same technology will work for all risk types, and policy admin systems can support all of the underwriting automation capability requirements.
Yet, says Smallwood, more than half of all insurers have already taken the first steps—making some level of investment in portals and underwriting workstations and putting external data to use.
The report’s genesis is the results of a 2011 SMA survey that targeted 144 individuals representing all major lines of business and insurers ranging from small, regional mono-line companies to large national, mutli-line companies. The goal of the survey was to determine carriers’ top underwriting challenges, and uncover specific plans for improving overall underwriting effectiveness, consistency and discipline.
In spite of an overwhelming number of respondents noting integration as a top challenge to successful underwriting automation, as well as technical challenges such as inflexible architectures and data management issues that make integration difficult, the pressure to obtain additional business capabilities that will deliver a better underwriting result are taking center stage.
“A most insightful data point is the fact that a whopping 42 percent of those surveyed say they are allocating 10 percent or even significantly more of their budget to underwriting. Underwriting automation is indeed high on the priority list,” notes Smallwood.
In particular, carriers are working to build a collaborative environment in which agents and brokers can work together in real-time mode to get the risk information and assessment parameters right.
“We are on the cusp of a shift in thinking, attitude and action,” says Smallwood.
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