P&C Underwriters Spend Too Much Time on Admin Processes

The role of the underwriter is ever changing. Recent research reveals that underwriters spend nearly twice as much time on administrative policy processing tasks, such as policy processing and procedural compliance, as they would like. And insurers are striving for a smarter use of time by focusing underwriters on high value tasks, such as those that improve relationships with producers.

The survey, commissioned by Guidewire Software and conducted by Ward Group, identifies and compares insurer characteristics and system functionality needs by type of underwriting strategy. Participants included more than 50 property/casualty insurers across North America, and represented a cross section of carriers by size, business type and distribution channel.

While the high-profit performers in both personal and commercial lines had, on average, newer underwriting systems, 60% of participants indicated the need for better core system functionality in order to make better underwriting decisions. Forty percent of companies indicated that their policy administration system is technologically behind that of their peers, and nearly 70% of companies are considering or have recently replaced their policy administration system or rating application in the last five years. 

"The survey results highlight the role of technology in helping insurers attain their underwriting objectives," says Neil Betteridge, director, Guidewire. "The right underwriting and policy administration system can make all the difference in equipping an insurer to streamline operations and profitably execute their underwriting strategies. This enables underwriters to focus on improving risk analysis and pricing accuracy, supported by better access to customer data, and frees them to interact more with producers and customers." 

According to the survey results, carriers felt they were appropriately staffed in most underwriting areas. Efficient personal lines insurers focused on streamlining policy processing and improving data quality, with more self-service utilization, resulting in reduced underwriting expenses and a profit ratio two points higher than the overall group. Sixty-three percent of these highly efficient carriers indicated they felt they were outperforming their peers in agent ease of doing business.

Among commercial insurers, efficiency did not consistently lead to better profit performance. Carriers that emphasized underwriting efficiency and shifted their focus from risk selection to service delivered profit ratios 14 points lower than the average.

The research also contained financial results, including:

Most Profitable Line of Business: Commercial lines excluding workers compensation with a 3-year profit ratio of 8.6%, primarily driven by a loss ratio of 51.2%.

Least Profitable Line of Business: Workers compensation was the line of business with the lowest profit ratio, posting a 10.5% loss.

Lowest Underwriting Expense Ratio: Personal auto and workers compensation reported the lowest underwriting expense ratios at 23.7% and 23.8% respectively.

Highest Underwriting Expense Ratio: Homeowners had the highest underwriting expense ratio at 31.3%.

To download the survey results, click here

For reprint and licensing requests for this article, click here.
Core systems Policy adminstration
MORE FROM DIGITAL INSURANCE