Five years after closing down, Ringling Brothers announced earlier this year that it would return to the circus business \u2014 only this time, without the controversy of animals.[i]<\/a> It will rely upon a greater selection of human performances and high-flying acts, one of which will certainly be tightrope walking. A funambulist is a tightrope walker.<\/p>\n\n\n\n In some respects, commercial P&C underwriters may feel a kinship with tightrope walkers. For years they have been attempting unimaginable feats of balance and dexterity \u2014 trying to keep the company\u2019s interests, agent and broker interests, and customer interests all in focus at the same time. All the while, underwriters have also been concerned with balancing their workloads and managing their portfolio profitably. Anywhere technology could be applied to the process with requirements gathering or decision-making, it was helpful. <\/p>\n\n\n\n The need for underwriting information has sometimes been at odds with the customer experience. Requirements are necessary, but they are a fiery hoop in the middle of the sales process. Agents and customers spend time attempting to collect all of the information. Underwriters keep tabs on where the application and supporting documents are within the process. Real balance is rare, and when it is achieved, satisfaction is still lacking. Commercial underwriters don\u2019t often feel fully satisfied with the information that is provided. Customers may feel like they are having to do acrobatics to get the coverage they need. All the while, a clock is ticking for the agents. Everyone feels the pressure to close the deal.<\/p>\n\n\n\n There has been great progress, however. Commercial P&C insurers have certainly advanced automation. The underwriting process has evolved from a heavily manual, paper-based environment to digitized, automated processes leveraging business rules engines in next-generation core systems. These advancements have paved the way for what\u2019s next \u2014 a wholesale reinvention of the underwriting process. These next innovations address growing pain points and they release the power of digital tools and digital platforms to bring efficiency and simplicity to the process. Best of all, they place requirements gathering and customer and agent experience on the same side, both contributing to positive, long-term results for insurers, agents, and customers.<\/p>\n\n\n\n No matter where you look in the insurance value chain, you\u2019ll find that any area is crucial. One could argue, however, that no area is more crucial to profitability than underwriting. Underwriting sets the stage for a book of business. It operates at the \u201cpolicy\u201d level of risk assessment and at the portfolio level of risk tolerance. It requires great care and thought. Underwriting is the friendly guardian at the gate of entry \u2014 given the task of being both invitingly service-oriented and ruthlessly protective.<\/p>\n\n\n\n Underwriting, because of its location in the value chain, must also be competitive. It is most helpful to view underwriting through a competitive lens. What can insurers do to help underwriters in their quest to keep the company competitive? From this vantage point, insurers can grasp their gaps and goals for underwriting. Where do improvements need to come from? How can technology provide innovations that make a difference?<\/p>\n\n\n\n For answers to these questions, we\u2019ll draw upon research from joint research efforts between Majesco and Strategy Meets Action<\/a>. The research gives a succinct picture of today\u2019s underwriting, including:<\/p>\n\n\n\n We\u2019ll briefly review some of their points and then consider how P&C insurers can begin shifting direction right now.<\/p>\n\n\n\n The pain points of underwriting can look like a three-ring circus, but most issues fit into two high-level categories: Process and workload<\/em> and data\/views of risk<\/em>.<\/p>\n\n\n\n Process\/workload<\/em><\/p>\n\n\n\n Most underwriters, especially those handling more complex risks, are frustrated by tedious tasks and lower-level activities that are time-consuming. Inefficient collaboration and communication (internally as well as with external partners, agents\/brokers, and customers) take away time that could be spent on more value-added tasks. Ideally, underwriters prefer to apply their expertise and experience to decision-making. They would also prefer to spend their time establishing and building relationships with distribution partners.<\/p>\n\n\n\n Data\/views of risk<\/em><\/p>\n\n\n\n Underwriters need and expect a rich set of data to aid in their risk analysis. Acquiring that data efficiently from both internal and external sources is a key pain point. Analyzing the data to gain insights is difficult. Gaining access to holistic data about policies and claims is vital yet often difficult to achieve with many of the legacy systems in place today. Oftentimes, the underwriter must transform qualitative information into a quantitative credit or debit decision\u2014along with a commercially palatable rationale for the broker. A related problem is an inability to have an integrated and unified view of the data for risk assessment.<\/p>\n\n\n\n Tactical tools<\/em><\/p>\n\n\n\n In middle to large-market commercial insurance, change has been slower to manifest than in small-business underwriting. Historically, larger, complex commercial line risks have seen more layering of tactical tools but have not had the same attention, priority, or technology investment as small commercial or personal lines. Even with an increase in tactical tools, non-holistic, incremental layering of capabilities may create significant change fatigue, especially when the current state is viewed as only semi-automated. The layering of more (but necessary) incremental changes will create personnel and execution risk. This can only be solved by a unified, holistic vision for underwriting\u2019s future state.<\/p>\n\n\n\n New and Improved data access<\/em><\/p>\n\n\n\n The current potential capabilities of data and analysis in the realm of P&C underwriting are truly astounding \u2014 if they can be successfully integrated and utilized. New data providers, new data tools, and new automation in decision-making are creating a rapidly changing competitive edge for underwriting. Preparing the organization to use these new capabilities, including many of which include additional risk scoring, should be a high priority.<\/p>\n\n\n\n Transformational technologies<\/em><\/p>\n\n\n\n Artificial intelligence technologies are becoming mandatory for underwriting all manner of commercial risks. Using machine learning to automate, triage, and fuel new predictive models for rating, risk assessment, and pricing can create a distinctive advantage for insurers. However, commercial line carriers consider innovation and InsurTechs to be a low-priority driver of their strategies. Insurers recognize the potential power of AI solutions, but the plans and adoption are still slow. According to SMA research, only 39% of insurers see the strategic value in prioritizing transformational technologies.<\/p>\n\n\n\n Improved workflow management and automation<\/em><\/p>\n\n\n\n Manual handoffs slow down processes and tend to create more errors. This does not just mean one person handing a paper document to another (although that may be the case). It may mean one underwriting employee needs to take action to digitally push the tasks to the next person in the process. Automation of workflows at every step in the process is becoming mandatory for competitive purposes, even in more complex risks. Leveraging process mining technologies to target change, along with digital platforms and a modern workflow engine for activities such as triage and assignment, significantly improves the underwriting process and frees up underwriters\u2019 and managers\u2019 time for more critical tasks. <\/p>\n\n\n\n Better use of data sources<\/em><\/p>\n\n\n\n Insurers are looking to refine rules and leverage AI to collect and analyze the best data available to provide a full picture of the exposures for a given submission. In addition, the automation of data collection and use of data pre-fill capabilities can offload the underwriter from these tasks and streamline the process. But most importantly, rapid access to high-quality data in existing core systems is essential for efficiency, speed, and accuracy in the risk assessment process.<\/p>\n\n\n\n Increased collaboration<\/em><\/p>\n\n\n\n One of the most important benefits of a digital platform for underwriting is the potential to improve collaboration between underwriters; agents, brokers, and other distribution partners; and customers (both prospects and policyholders). Digital portals for submissions, ready access to current information, and digital communications reduce wait times and optimize the process for all involved.<\/p>\n\n\n\n Portfolio analysis capabilities<\/em><\/p>\n\n\n\n Over time, underwriters have been transitioning from the assessment of individual risks to the management of the overall portfolio. For small commercial lines, there is great potential to reach high straight-through processing (STP) rates and enable underwriters to focus more on exposure analysis and assessment of the overall book of business. This is because these techniques have been proven in personal lines and are currently being adopted to less homogenous risks\/data. For more complex risks, there will still be a need for human expertise in the evaluation of many individual risks and broker interactions, but automation will assist there as well. In addition, there will still be the same need for more portfolio analysis capabilities.<\/p>\n\n\n\n For underwriting, the future will be about the blending of tech-based automation and insights with the expertise of human specialists.<\/p>\n\n\n\n Commercial insurers recognize that significant change is coming; however, they expect a longer runway to ramp up. Given this, the gaps in today\u2019s strategic focus seem to hint at confusion over where to start. Many are concluding that a great place to start is via an underwriting digital platform.<\/p>\n\n\n\n The potential for underwriting is no longer conjecture. Software as a Service (SaaS), automated, next-gen, insight-driven insurance underwriting software<\/a> for P&C commercial and specialty insurance exist to make it better. The future of P&C commercial underwriting is:<\/p>\n\n\n\n That is what Majesco Digital Underwriter360<\/a>[DG1]<\/a> <\/a> does. It is an intelligent, insight-driven cloud-native SaaS, that enhances underwriting efficiency and profitability, drives underwriter productivity and profitability, and creates greater transparency and collaboration with brokers. <\/p>\n\n\n\n What does this environment look like?<\/strong><\/p>\n\n\n\n In our next digital underwriting blog, we\u2019ll look at the design and construction of this environment. How can underwriting become a seamless hub of information, fed by the best data management and analytics practices available today? Which advancements make a real competitive difference \u2014 moving commercial insurers from capable to innovative? To hear the latest from Majesco and SMA on Underwriting and analytics, watch Majesco\u2019s webinar, The Art and Science of Underwriting Powered by Artificial Intelligence and Machine Learning<\/a>. <\/p>\n\n\n\nRequirements gathering vs. customer experience<\/h2>\n\n\n\n
Assessing the Need for Digital Underwriting Transformation<\/h2>\n\n\n\n
\n
Underwriting\u2019s pain points<\/h2>\n\n\n\n
Identifying capability gaps<\/h2>\n\n\n\n
Opportunities for improvement<\/h2>\n\n\n\n
What can an underwriting digital platform provide?<\/h2>\n\n\n\n
\n
\n\n\n\n