Mounting competition and market shifts are forcing property/casualty insurers to take a new look at core business processes.With an eye toward profitable growth and increased market share, carriers are now focusing on underwriting-an area long under-served by technology. Today, most underwriting is done through slow, error-prone manual processes or by outdated legacy applications. This inefficiency is driving down profits and eroding sales.

To remain competitive, carriers must improve underwriting in three ways:

1. Increase automation to improve underwriting discipline and efficiency, reduce error rates and minimize leakage;

2. Make it easier for agents to do business with them; and

3. Speed the time to market with new insurance products.

While policy administration systems have begun adding underwriting features, carriers are coming to realize that "better underwriting" is a huge undertaking with unique challenges.


A critical factor for driving profitability is increased pass-through or straight-through-processing (STP) of applications from the initial submission through underwriting and pricing without human intervention. Also, speed must be paired with accuracy: carriers must quickly identify the profitable risks and offer the first, best quote.

As confirmed by Needham, Mass.-based TowerGroup, some insurers are making the strategic shift to STP even for complex risk classes that were previously underwritten only through manual, subjective evaluation. The approach is supported by automated decision support capabilities so that only "exceptions" are processed by underwriters. This approach reduces cost, saves time and ensures consistency, while freeing underwriters to focus on more complex risk submissions and larger business.

Agents, given a choice of carriers, will be drawn to the one with the easiest, fastest quoting process. For carriers, it's imperative to offer agents a hassle-free way of submitting information, either via a Web portal or through their agency management system.

A carrier with a more streamlined process and a complete, easy-to-use agent workspace will issue an initial, best quote, and win the business. Carriers should be able to issue quotes automatically unless underwriting exceptions occur, in which case the back-and-forth interactions should be easy and automated.


Today, many underwriting rules are either locked away in people's heads or buried in paper manuals, making it difficult to apply rules and processes consistently. As a result, carriers take a long time to develop and deploy new insurance products, or to adapt existing lines of coverage to market trends.

Better knowledge management capabilities will provide a dynamic learning environment and an ability to continuously capture, improve and share underwriting experience and best practices. With predictive analytics and decision-based modeling of underwriter behavior, carriers can achieve a consistent application of process and discipline. Advanced data analysis tools and mathematical modeling allow finer segmentation and precision pricing.

Automation is also needed to streamline multi-line underwriting. Most commercial customers purchase multiple lines of coverage, however, IT systems are in silos around single lines. Carriers can be more customer-centric and ensure accuracy and discipline through systems that enable multi-line underwriting.


The next generation of underwriting management systems will enable carriers to address these challenges while achieving profitable growth and agent loyalty. System architectures are moving toward flexible, component-based, modular approaches. Applications are shifting toward a more vertical industry focus. New standards such as service-oriented architectures will improve systems performance and provide flexibility, adaptability and scalability.

The benefits of a strategic, integrated underwriting system include:

  • Support for management and business strategies. Management dashboards, predictive analytics and scoring models give carriers visibility into the underwriting process, enhance risk management and selection, offer better customer segmentation, and reduce underwriting leakage.
  • Increased revenue and profitability. Through more accurate risk selection, strategic underwriting will enable carriers to increase revenue, lower claims and improve STP ratios.
  • Customer intimacy. Using new Web-based platforms and portals, carriers can achieve real-time collaboration between agents and underwriters, while lowering the cost of communication. By providing a customer-centric, multi-line view of the underwriting business, insurers can become the carrier of choice.

Underwriting is a critical business process, and carriers can leverage technology to convert this core function into a competitive weapon. Technologically advanced carriers, who underwrite faster, more efficiently and more accurately while maximizing their knowledge assets, will be able to capture higher shares of better risks-achieving higher retention, profit and market share.
John Belizaire is CEO, FirstBest Systems LLC, Lexington, Mass.

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