When it comes to insurers' attitudes toward underwritingautomation, it shouldn't be a matter of “if and when” but rather“what and how,” says Deb Smallwood.

“A full 88 percent of insurers in our research are investing inunderwriting projects or initiatives,” says Smallwood, founder ofStrategy Meets Action. “There definitely is a high level ofinterest in the technology. Insurers need to establish clarityaround what solutions are available and how they can be best usedto achieve their underwriting automation goals.”

Providing that clarity was the objective of a session, titled“Underwriting: Challenges, Creativity and Myths” at the ACORD LOMAInsurance Systems Forum. Smallwood was joined on the panel byCharity McGill, product manager at Accenture, and Justin Manley,CIO at specialty insurer Torus.

“A key theme of the session was that underwriting automation isnot just about achieving straight-through processing,” McGill says.“Instead, it is about using technology to assist the underwriterand streamline the underwriting process.”

A Study in Automation

Streamlining the underwriting process was a benefit targeted byTorus. Manley highlighted the company's experience withimplementing Accenture's Duck Creek Policy Administration platform.The system, branded internally as “Escape,” supports threedifferent external-facing web portals for the casualty/umbrella,errors and omissions, and healthcare lines of business. Torus alsouses the platform internally for straight-through processing ofsmall- to medium-sized commercial accounts in ISO-based lines.

“Deploying an underwriting automation solution allows us tofocus our underwriting intelligence on accounts that require hightouch, especially in casualty and umbrella lines of business,”Manley says.

“We were finding a lot of our underwriters wanted to go afterlarger accounts but were buried by their volume of small and mediumaccounts. A lot of those small accounts were very similar in natureand perfect candidates for automation.”

After starting itsU.S.business just three years ago, Torus hasbeen able to grow to over $1 billion in written premium, anachievement that Manley says couldn't have been reached withoutincreased efficiency.

“Underwriting automation has been a key to managing our growth,”he explains. “We reduced the quote process from 12 minutes to four,and we've increased our quote hit ratio to 87 percent.”

Manley says that if there is one message he would like toinstill it is that underwriting automation doesn't equate tounderwriter replacement. “We've continued to grow and hire becausewe've used automation to help expand our business,” he says.“Underwriting automation doesn't have to lead to jobelimination.”

Maintaining an Edge

Smallwood believes the high level of investment in underwritingautomation indicates that there is a “sense of urgency” around thetechnology enablement.

“In a competitive landscape, insurers need an edge, and whatdifferentiates an insurance company are product, price, andservice,” she explains. “Underwriting automation tools helpinsurers bring on new risk types and products, allow for consistentand disciplined pricing precision, and allow insurers to becomeinnovative. Automation will also free underwriters to spend moretime on more difficult risks, have more time to expandrelationships with the agent or broker, and improve overallresponse and service. It's a win-win for everyone.”

“Automation is about bringing everything to underwriters'fingertips,” says McGill. “One of the most frustrating things I'veseen is that as a company moves beyond commodity lines and intohigh-touch products, underwriters spend an enormous amount of timebuilding an analysis case and putting information into a singleunderwriting file. They can really benefit from having all thatinformation brought to them.”

“The definition of automated underwriting includes improving theefficiency in underwriting process and supporting the effectivenessin underwriting decisions with the use of software, tools, data,and analytics,” Smallwood explains. “The level of automationapplied varies depending on type/size of risk, line of business,and underwriting strategy. The role of the underwriter may change;it depends on level of automation and the type of automation.”

Growing Role for Technology

Interest in automation will continue to grow. Carriers firstbegan deploying solutions in personal auto and expanded tohomeowners. Today, automation of business owners, small commercial,and workers' compensation is more commonplace, and carriers arefinding ways to move automation into middle market and largercommercial lines.

The lesson for insurers is that this type of technologyinvestment will become table stakes. Without it, the pricingprecision, efficiency, cost saving and effectiveness will not bethere,” Smallwood says. “Companies without underwriting automationwill ultimately lose their competitive advantage, exactly what wewitnessed in the personal automobile

space.”