In 2014, a majority of U.S. insurers are focusing on profitable growth as their No. 1 business goal, with many focusing on commercial lines of business. Strong underwriting long has been a core competency for commercial insurers and is important for maintaining a profitable book of business, but underwriting excellence now is crucial to achieving aggressive growth in these highly competitive commercial markets.
Underwriting is critical for organizations looking to enter new markets or new classes of business, or expand their appetites for higher-risk business. Commercial lines under- writers often have the tightest connections with agents and can play a vital role when the insurer’s growth strategy is to optimize broker relationships and get more out of existing channels. And, as always, optimal risk selection and pricing can make or break a profitable book of business, especially in middle- and large-commercial markets.
A lot rides on the commercial underwriter’s performance, but the tools they typically use are basic and fragmented. Underwriting tools have been adopted sporadically. Document-based workflow tools had an impact early on, enabling underwriting teams to organize electronic files, automate workflow and tasks, and improve internal efficiencies. Data warehouses and reporting environments later cropped up to provide loss history and enable underwriters to explore data, detect patterns and gain insights that could improve selection and pricing. Third-party data became more available and instantly boosted data quality and transaction turnaround time. And rules engines and predictive models were introduced to assess risk and fit without detailed data analysis.
As beneficial as these capabilities are, the number of disparate systems and services underwriters use has increased steadily. Many commercial underwriters now must access an agent portal, BI environment, policy system, standalone predictive model, several data reporting services, document management/workflow tool, and e-mail when working a submission.
Comprehensive and instantly available third-party data, big data, more sophisticated predictive models and data visualization are the technologies that are poised this decade to make an impact on underwriting. With all of this new data, the focus and challenge in underwriting changes. Gathering lots of high-quality data becomes easy, but analyzing the data can be difficult.
This may be the tipping point that causes insurers to thoughtfully plan their underwriting tool set and provide a more comprehensive and integrated platform for underwriters that addresses data collection, analysis, submission management and coordination.
More and more larger insurers are considering underwriting desktops or workstations, platforms that offer collaboration, data collection, file management, reporting, analytics, workflow and automated rules that make underwriters more efficient, without doing the underwriters’ jobs. Others incorporate underwriting capabilities into their agent portal or policy administration systems.
The vendor community is responding to these needs. More vendors are enabling delivery of these standalone underwriting desktops by offering full products, substantial development accelerators, or frameworks. Agent portal and policy-admin solution providers are offering more underwriting-focused capabilities out of the box.
More than half of U.S. insurers are planning or in the process of a major technology transformation and many are looking at the underwriting experience from a more holistic perspective and streamlining these traditionally standalone capabilities. Insurers are approaching the tipping point where robust and integrated underwriting platforms are needed to improve agent satisfaction, support growth and maintain or improve underwriting results. Thoughtfully planning for the needs of this critical user group, not just looking for modern core systems, should be top priority as insurers plan their strategic technology vision.
Editor's Note: This column first appeared in our
INNSight is exclusive commentary from Novarica.
Martina Conlon is a principal at Novarica, a research and advisory firm focused on insurance technology strategy for insurers.
