Nearly 90 percent of carriers currently are investing in their underwriting function or plan to do so over the next three years, according to a new Accenture survey, which pointed to new data sources, better analytic tools and more automated systems as the primary drivers of new and continued investments in underwriting technology. The majority of carriers are investing in automation, predictive modeling, data verification and collaboration tools, according to the 559 North American commercial lines, specialty lines and reinsurance underwriters polled.
The top challenge for underwriters was maintaining underwriting and pricing discipline, with 72 percent of respondents placing it in their top three challenges; high operating costs followed (55 percent), with lack of quality underwriting information (47 percent), recruiting or retaining talent (43 percent) and outdated/inflexible systems (43 percent) also acknowledged as challenges by nearly half of the respondents.
The most popular answer for how insurers plan to improve the effectiveness of underwriting over the course of the next three years is through process automation (57 percent). However, the note reports that only 43 percent of respondents have automated 70 percent or more of their underwriting processes.
The next top priorities are increased use of predictive models for pricing and risk evaluation (51 percent), and increased use of external data to evaluate risks (51 percent). According to Accenture, these two will become even bigger market differentiators as some carriers invest significantly to take the next leap forward. The report mentions, for example, middle market carriers ramping up their use of telematics for commercial fleet business and seeing accident reductions of 15 to 20 percent through alerts, coaching and behavior modification.
Improving collaboration tools also was mentioned as an investment area for the next three years by 49 percent of respondents.
However, while the investments continue, half of underwriters believe new technologies implemented have not met effectiveness expectations, a percentage that is buoyed by frontline underwriters using the technology first-hand, which means that management may not have a full grasp of effectiveness; also, more than half feel their workload has increased because of technology. Reasons cited for the lack of efficiency gained from technology were lack of data integration, lack of process integration and insufficient training.
Accenture cited the following five “core traits” for carriers to get the desired results from technology investments:
- Clear goals and measures: Some of the most successful metrics following a tech investment come as the result of efforts with a specific, defined business goal, such as targeted growth, lower underwriting leakage or reduced non-value add activities.
- Innovative process and ideas: Nearly 40 percent respondents view their frontline underwriting practices as average or deficient. According to Accenture, once carriers understand process inhibitors to growth, they can better draw on innovative ideas, such as new analytical capabilities or data sources, to help them think and behave more productively with minimal impact to underwriters.
- Information at underwriters’ fingertips: Almost 50 percent of underwriters surveyed believe that there is room for improvement around accessible intuitive tools; Accenture writes that “underwriting solutions need to focus on integration that presents data and insight to the underwriter at the point of need,” which could cut down on time wasted by underwriters on non-core tasks.
- Modern operating model: According to the survey, both underwriters (82 percent) and management (84 percent) rated underwriter controls as important or very important. As part of that, the report urges carriers to evaluate their overall operating model and know how well their authority structure can contribute to business improvement.
- Greater management insight: Tracking operational, transactional and quality metrics yields essential insights into underwriting performance, according to Accenture. While every carrier will have different points of emphases, the ability to monitor performance is key to keeping up with the growing opportunities to improve speed, efficiency and customer-centricity into underwriters’ workload.
For more information on underwritings growing presence in IT budgets, click here.
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