With more than half the year now gone, industry evaluations havebeen surfacing, and underwriting is a focal point. For example,according to a Swiss Re sigma study released in June, worldwidepremiums for life and nonlife insurance grew by aninflation-adjusted two percent to $2.941 billion in 2003. The studyshows premiums and results in nonlife business increased markedlylast year. Life insurers reported improved profitability despite aslight decline in premium income. Rate increases together with morestringent underwriting standards and comparatively few extremelosses resulted in a marked improvement in nonlife underwritingresults in 2003, a Swiss Re statement said.

On the property/casualty side, during Swiss Res 2004 MidyearEconomic and Insurance Industry Review conference call (as reportedin the National Underwriter Online News Service), senior economistThomas Holzheu predicted several forces in the marketplace willdrive insurers to maintain their underwriting discipline for theforeseeable future, despite the current moderating priceenvironment. Property rates have been moderating but remainprofitable, he said. Casualty rates are still strong and continuingto climb in certain lines.

The industry overall will be seeing profits from underwriting inthe future, Holzheu forecast, and this is due to a couple offundamental changes in the industry. One change he pointed to is amore systematic observation of the markets, with more accessiblepricing information and now-standard models that didnt exist fiveor more years ago.

So, where does this leave us? To sum up, we may be happy, butwere not carefreeand thus the focus on underwriting (for more onunderwriting, see the features on pages 14 and 18).
With the industry targeting growth, underwriting has becomestrategic, re-marked Gartner analyst Kimberly Harris at a recentindustry conference. Sales and underwriting will move closertogether to support faster, more effective underwriting, which thenmakes the [producer] happy and gets the information to the customerso they can close that sale, she said.

Among new underwriting strategies, she indicated carriers arebeginning to discuss initiatives related to an electronic workforce, transferring underwriting to the point of sale, movingunderwriting to Internet-based channels, and thinking aboutstraight-through processing vis–vis the whole underwritingcycle.

To accomplish this, she added, companies are looking at newtechnologies: imaging and workflow, Web-enabled workstations,business rules and decisioning technology, and underwriting ASPservices.

Which of these technologies are now prime time? Maturetechnologies today (2004-2005), she noted, include business processmanagement-based and businessrule, exception-based technologiesthat will allow you to improve your underwriting process.

Obviously, all such strategies cant be implemented at once.Given the current environment, the key is keeping in sight thatfinal destinationachieving effective underwriting to maximizeprofitabilityand then taking it one step at a time.

Sharon S. Schwartzman
Editor-in-Chief