In 2008, Accenture published the results of the first P&C Underwriting Survey in collaboration with The Institute. As the longest-running longitudinal underwriting survey in the insurance industry, this report reveals an overall picture of where underwriting has been – and where we are headed. It shows us the relationship between the goals that the leaders have set over the last decade and the significant progress that has resulted in these initiatives.
One of the most important insights I got from 2021 P&C Underwriting Survey is that not much has improved for insurers in the last 15 years. Despite advances in technology, insurers are still facing the same challenges as they did in 2008, and in some areas the state of the insurance guarantee as a core function of insurance business has deteriorated.
In my previous posts, I discussed the transition to automation, the effects of technology in the issue process and the declining focus on the work that insurers do. In this post, I want to highlight the importance of insurance expertise and explore a different approach to combining technology with the set of skills that will make insurers’ jobs easier and more efficient.
As early as 2008, our survey showed that more than 40% of insurers’ time was spent on non-core information. Underwriters struggled to move on from older systems and adopt new solutions. Fast forward to 2021 and the latest survey shows that only 35% of insurers feel that the technology has reduced their workload. In 2008, that figure was almost the same, 36%.
In both 2008 and 2021, the lack of data integration was cited as a challenge associated with new technology, with 72% of respondents in both years reporting the problem. In 2021, 79% of respondents reported that lack of process integration was the main reason why technology negatively affected their workload.
This information made me reflect on the insurer’s daily responsibilities and think about why the technology has not made the issue guarantee easier. Today’s answer shows that less value is placed on the underwriters themselves. There is empirical evidence for this, including data showing that survey respondents largely see that recruitment, training and retention programs in their organizations are deficient.
In addition, the focus on central insurance controls and discipline is reduced: only 30% of an insurer’s time is spent on risk analysis and generating quotes. Risk analysis is the core competence of an insurer. Their job is to review data from different sources and synthesize it to make a correct (and profitable) decision. With this lens, I see the guarantor as the original data researcher.
The prestige and value placed on the insurance guarantee profession has taken a dive over the past 15 years, which has led insurers to get stuck with the same problems they faced over a decade ago. Insurers have given priority to minimizing costs and “demystifying” the issue guarantee by automating the process or reducing the insurer’s role in risk assessment.
We have done this by removing work from insurers, providing new risk and pricing models to facilitate decision-making and trying to use automation to make the issue easier. None of these initiatives are negative in themselves. They all work well to assess simpler, homogeneous risks while reducing costs and improving pricing. But they miss the fundamental issue of a more complex issue guarantee.
The real challenge is that underwriting is still a paper-first process with important data in PDF files and spreadsheets attached to emails from brokers. To assess the risk, insurers still have to move between different documents and look for data that is formatted differently depending on which broker it comes from.
Although we have tried to make the processes of underwriting simpler, there has been no focus on improving the computer science aspect of underwriting. This requires more data to be available. We need to implement solutions that help insurers to extract, manage and assess All their data in one place in a way that also provides relevant context and deeper insights.
Many organizations have made significant strides become data driven in the last 15 years. Insurance has always been driven by data, but it is time to think about how data aggregation and analysis are optimized in issue processes. If insurance companies want to see greater efficiency and improved consistency and quality in risk and pricing decisions, our focus cannot remain on relieving the insurer’s work. We need to help insurers do what they do best to analyze information, reveal patterns and make decisions based on a holistic view of an applicant.
To do this, we need to consider third-generation underwriting platforms like the ones I discussed in my previous post. These are actually five simple priorities:
- Invest in solutions that extract all the data that guarantors need from their silos, gather information from PDF and spreadsheet attachments in one place, which eventually completely eliminates that mode of communication.
- Organize information, knowledge and data about the critical issue decision steps such as triage, risk assessment and pricing.
- Present information in its context. For example, let insurers look at new contributions compared to similar contributions to help them understand how the filing or renewal differs.
- Integrate this data-driven, analytics-first approach into existing workflows to make the experience seamless.
- Establish quality controls, measures and feedback mechanisms to improve the quality and consistency of the emissions guarantee within the new process.
Fortunately, we are already seeing insurance companies take steps towards improvements in this area. The 2021 survey shows that 67% of insurers will prioritize investments in insurance platforms over the next three years. 71 percent want to add predictive analytics to their technical stack while 66% plan to invest in customer and broker portals, another way to streamline data aggregation.
If you want to know more about how we help companies deal with these five ideas, let me know.
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Disclaimer: This content is provided for general information purposes only and is not intended to be used in consultation with our professional advisors.