The first is the drive to reduce complexity. New technology is simplifying systems and reducing the amount of manual document-handling between carriers and agents. The second trend is an increased use of data-driven decision-making for more predictable underwriting results.This is the conclusion of research conducted by TowerGroup, a Needham, Mass.-based research and advisory firm to the financial services industry.

The study, which was released at the ACORD/LOMA conference in May, also revealed the following:

* Current market forces are putting increased pressure on insurance companies' profitability and focusing carriers' attention on the underwriting process.

* Many carriers have critical inefficiencies to overcome: Quoting takes up to three days, processing new policy submissions takes up to 16 days, and policy production has a 10% error rate.

* The best-practice use of technologies for workflow management and data-driven decision-making can yield positive returns.

* Leaders in underwriting practices are reducing back-and-forth handoffs by 90% and saving close to 50% on maintenance and support costs.

* Best practices enable insurers to dramatically reduce operational costs as well as markedly improve underwriting quality, control and profitability.

The research also revealed the primary business initiatives that technology leaders attribute to their underwriting success:

* Streamlining data entry. Personal lines carriers are ahead of commercial lines with 80% of personal lines carriers running some level of straight-through processing.

* Improving flexibility with automated workflow. Robust workflow systems are now available. One carrier was able to retire 85 systems, saving close to 50% on system maintenance and support.

* Using data-driven, empirical decision-making tools. One carrier using business rules management and a predictive analysis engine automated 80% of new business applications, and within two years improved profitability by 30% and boosted new policy growth by 10%.

* Reducing IT maintenance and support. Business process management, business rules, predictive analysis and rating technologies are now available with preconfigured user interfaces and templates that allow them to be maintained by business users without the intervention of IT.

The TowerGroup study, "Underwriting Efficiency and Effectiveness Study: State of the Market and Best Practices," was commissioned by Riskclick, a New York-based business process management firm. For a complete copy of the report, send a request to

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