Recently, there has been a seismic change in the C-suite with most as CFO and CIO, among others, taking on much more strategic roles in the business. One role that, however, has largely remained unchanged for decades is that of Chief Underwriting Officer. Historically, at the end of the pipeline, CUO has not been able to drive meaningful strategic changes for the business. It's time for that to change.
As with most long-term problems, this was caused by unintended consequences. Most operators have long divided their subscription functions along market segments or business areas. Holding guarantees responsible for profit and loss like this has driven internal competition and tactical success. It has also fragmented insurance processes, operations, data and systems.
For most P&C and life entrepreneurs today, insurance costs are more expensive than they need to be and less efficient than they should be, at a time when the insurance environment is becoming more complex. Manufacturers, agents, brokers and customers all expect faster and more accurate offers. Risk assessment is complicated by new exposures and data sources.
The good news is that this does not have to be the case.
The five challenges for drawing transformation
In a new article on insurance transformation that I wrote with my colleague Kym Gully, we described five strategic challenges that insurance faces today.
The first is under insurance business pressure to significantly reduce costs while maintaining or improving quality. This is particularly important (and difficult) given the recent changes in major risk demographics, which have been accelerated by the pandemic.
The other is insurance platforms . In general, operators are dissatisfied with their insurance systems, workflows and analytical skills. Many do not deliver one or more of the three must-have features with a modern drawing capability:
- Grading and quotation solutions that quickly set price and price packages
- Workflow solutions that efficiently handle submissions, teams, documents and data
- Use of emerging computer platforms
The third is growing need for innovation . The market landscape is changing rapidly thanks to significant changes in both product and distribution. Online brokers and points of sale create new distribution channels. OEM and OSP become sales channels or competitors. These changes drive the insurance contract from the role of "policy administration" that it has become comfortable with since the early 2000s.
The fourth is evolving customer needs and expectations, which has been charged by the COVID-19 pandemic. After being forced to take the step, many digital attitudes are now familiar and even comfortable with digital shopping. These expectations will be transferred to transport companies.
The last challenge we identify is the huge amount of new information available to insurers . This can also be a boon for insurance, but most insurance groups are not equipped to evaluate, select and integrate the available data sources.
CUO's Emerging Role
While these five challenges are complex, I believe there is a relatively simple step that carriers can take that will lead to real progress for all of them: making their Chief Underwriting Officers independent and strategic. votes in the boardroom.
CUO has traditionally focused on maintaining guarantee standards, driving quality, and balancing capital use throughout the organization. Setting up the insurance strategy is usually not their territory.
This connection, we claim, is behind the insurance challenges that transport companies now face. Transformation of guarantees requires a level of commitment and investment that is difficult for an individual division to achieve on its own. If insurers are to become future-ready organizations, they must raise the role of CUO to a strategic role, just as the roles of CIO, CFO and COO have changed in recent years.
If you are considering changing your own insurance function, I would love to hear from you. You can also find the entire paper that I co-authored with Kym, which contains three steps for CUOs to convert guarantees at the strategic level, here.