Ask many P&C insurance experts about points of interest right now, and you'll likely hear the word "agents" somewhere in the answer. Even a session on IT strategies in a cost-cutting environment at ISOTECH 2009 in November turned into a lengthy discussion about agents.
The relationship between the underwriter and agent is an important one, especially in the current market, says Mike Fitzgerald, senior analyst at Boston-based Celent. He says it's difficult to grow a business in the current economy - you can introduce new products, but consumers are demanding simpler products; you can acquire other companies, but capital markets are tight. Thus, establishing, maintaining and improving relationships with agents may be the answer, he says. "And companies that take innovative approaches are going to win."
The responsibility to improve relationships now likely falls on the underwriter. The role of the underwriter - especially in the personal lines P&C industry - has changed over the past few years, in part due to technology. Gone are the eight-hour days of sitting at a desk. The availability of business rules and automated underwriting has freed up underwriters to take on somewhat unfamiliar responsibilities, one of which being the face and voice of the insurer to agents.
While in the past, underwriters and technology may not have mixed well, Stephen Forte, a research director with Stamford, Conn.-based Gartner, says interest in underwriting technology, especially from personal lines, is growing. "What we've seen in talking to underwriters is that it's not really diminishing their intellectual capital or eliminating some of the processes. It's alleviating some of their manual tasks and enabling them to do more of the granular analysis work they really want to do."
Technology also is freeing up some of the underwriters' time to become more involved in the sales process, Fitzgerald says. "As you put this technology in place and offer some rules-based underwriting and pricing, you offload some of the template decisions to the other people in the enterprise and free up the underwriters to build relationships and sell more," he says.
One insurer leveraging technology is Marietta, Ga.-based Insurance House, with the help of Redwood Shores, Calif.-based Oracle Insurance Data Capture and Oracle Insurance Insbridge Rating and Underwriting.
"The balance between technology and relationships is critically important to our business," says Kathy Hawkins, VP, sales and marketing at Insurance House, a regional managing general agency and broker serving independent retail insurance agents throughout the Southeast. "The ease and dependability of the technology enables our underwriters to focus their attention on the needs of the agency and the customer. We have more time to listen and solve real issues without the distraction that tedious, manual processes can create. It is a combination of science and humanity for us. We like to hear from our agencies; if they are not talking with us, they are talking to our competitor."
Insurance House is just one of many insurers that view the agent/underwriter relationship as critical. And for good reason. According to a January 2009 Celent report, "Independent Producer Survey," co-written by Fitzgerald, independent agents said the underwriter relationship is the No. 1 reason they call a certain carrier their favorite. "Agents understand that underwriters are not going to be able to write everything that they send," he says. "But what agents really value is an underwriter who can work with the agent to get the client to (or close to) where they want to be. If there's not anything the underwriter can do on the price, they have to know the business well enough to suggest alternative coverages for different policy forms." This requires a good knowledge of the industry and flexibility, willingness and availability, he says.
York Fire & Casualty Insurance, Mississauga, Ontario, positions its senior underwriters this way with the help of technology. "Our underwriters use the same system internally," says Bryan Bedford, York's VP carrier-agent technology solutions. "So when the agents do call in, it's not as though they're calling into a helpdesk. They can actually talk to the underwriters. They can view the same transactions at the same time."
York uses underwriting rules and an underwriter desktop from Toronto-based iter8 and reports an 80% rate of automated underwriting for 2009. "There might be some rules that kick out that don't allow the underwriter to complete the transaction," Bedford says.
This has enabled York's junior underwriters to do more of the keying and the processing, which has freed up the senior members of the team to do more team-leading activities internally, or venture out of the office to industry events and beyond, Bedford says. "Underwriters are getting out to agents' offices more often, where they can help with cross-selling and up-selling or assist with product training. It's certainly helped build those relationships."
Arista Insurance is selective in the relationships it builds with agents. The insurer sells solely through approximately 250 agents, and views them as partners, not customers. "We work with them on joint initiatives to develop the business that they would place with us against the capacity that we have," says Dave Cheeseman, head of business systems at Arista. Its underwriters are in daily contact with agents, and the edgeConnect platform from UK-based edge IPK enables its underwriters to quickly respond to particular broker opportunities, schemes and initiatives. "We can use the edgeConnect tool to actually drive those through very quickly," says Cheeseman. "There's ongoing communication in terms of what the requirements might be and the best way to adjust - be it pricing or coverage - is to enable us to give our brokers' clients the coverage level that they want, and hopefully secure that business."
SUPPORTIVE TECHNOLOGIES
More sophisticated technologies have hit the market over the past few years. Forte points to underwriting workstations, specifically from Accenture and FirstBest, as technology that enables collaboration between underwriters and agents. "The idea behind a workstation is to enable the underwriters to have a central location where they can access internal and external data needed in order to fully evaluate the risk," he says. "So, for example, on the property side, making it possible to calculate the insurance-to-value or probable maximum loss, or on the reinsurance side, doing some line-setting to determine retention levels for facultative reinsurance. Those are the types of things that these newer platforms provide in the commercial underwriter's space."
Fitzgerald says rules-based engines can take the simple, somewhat mindless-type of work out of the system and enable the underwriters to use their expertise where it can make a difference.
"Automated underwriting isn't going to replace the underwriter; it's going to free up underwriters to use their talent in the best place possible," he says.
And, as mentioned earlier, that place may be improving an agent relationship. However, Forte says some insurers reposition personal lines underwriters as business rule specialists or account managers. "They're still underwriting, but they also have more control over the business. For example, let's say there's a Category 5 hurricane about to make landfall on the Florida coast. Those personal lines underwriters can go into the system and change the business rule so that agents in the area do not have binding authority. Before, trying to get that done was impossible. You had to pick up the phone and call each agent."
Arista has empowered its underwriters to make some of those decisions. "We're eliminating the mundane elements of underwriting," Cheeseman says. "There are certain places now in the UK market where, if a risk comes in, people are wading through manuals and guides to establish the baseline pricing, and from there the underwriting skill is refining that baseline specific to the risk. We're trying to use automation to eliminate that baseline work so that we identify the risk components where underwriter skill sets come into play." Cheeseman says the key is elevating the process to a level where the most-skilled underwriters - those who best understand risk acceptance - can devote their time to doing just that. "Some people who regard themselves as underwriters in the truest sense perhaps aren't."
(c) 2010 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.
New Avenues of Communication
First there was mail; then there was phone; next came fax; and then there was e-mail. Agents and underwriters have seen the communication avenues change over the years. The question is: What's next?
"There is online chat and Web conferencing, but they aren't really widely used [in the insurance industry]," says Mike Fitzgerald, senior analyst at Boston-based Celent. "It's unexplored territory and frankly some of it is generational. However, I do think the underwriters need to be more accessible, and have multiple ways to be reached."
Dave Cheeseman, head of business systems at UK-based Arista Insurance, agrees that a combination of avenues is beneficial, but eliminating outdated avenues is just as important. "We don't take postal presentations," he says. "Agents must communicate via e-mail, and we only reply via e-mail. Therefore, I think you're moving at a stage with more automation and Web development."
Cheeseman says this not only frees up underwriters' time, but agents' time as well. "They have more time to communicate and do more work themselves in terms of understanding their customers' needs. So I think [the change in communication avenues] will be gradual, but I don't think you'll ever get away from the need to talk."
York Fire & Casualty Insurance, Mississauga, Ontario, wants to enable a number of communication vehicles to improve the agent/underwriter relationship, but is careful not to overload its underwriters. "We've discussed other possibilities, including real-time chat function," says Bryan Bedford, York's VP carrier-agent technology solutions. "But there are issues around that, such as tracking. That [function] would [come] more from the technology helpdesk instead of an underwriter aspect. So I don't see it heading that way."
(c) 2010 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.
