Insurers are making substantial investments in underwritingtechnology, but the carriers must ensure that they are not justadding tools to the process and that the solutions actually improveefficiency, according to a recent survey and report byAccenture.

The Accenture online survey of 559 insurance underwriters inNorth America found that the majority of carriers are investing inautomation, predictive modeling, data verification andcollaboration tools.

Specifically, 57 percent of respondents say they will invest inincreased use of process automation over the next three years, 51percent say they will invest in increased use of predictive modelsfor risk evaluation and pricing, 51 percent say increased use ofexternal data to evaluate risks and 49 percent say improvedcollaboration tools for team underwriting and brokerinteraction.

However, the survey also found that underwriters' perception ofcurrent technology investments is fairly subdued. Accenture notesthat “overall, only about half of the underwriters surveyed feltthat the technology currently in use within their division is veryeffective.”

The negative ratings were higher among frontline underwritersthan management, says Accenture, “indicating there may be more ofan issue than management realizes.”

“As the survey results show,” says Accenture, “a key focus ontechnology investments needs to be on effectiveness ofexecution—confirming that the solution being developed indeedimproves underwriting efficiency and performance, rather than justadding another tool to the process.”

Accenture outlines the following five core traits that couldhelp carriers get better results from their underwritinginvestments.

Clear Goals and Measures

Accenture says, “Carriers developed many underwriting tools as aresponse to the need for an underwriter desktop or workstation, butwithout a clear aim on achieving a business need—such as improvingspeed-to-market.”

Accenture notes that a previous survey it conducted found thatby deploying the right underwriting components well, carriers canincrease targeted growth by 15 to 20 percent, lower underwritingleakage by 30 to 50 percent and reduce non-value add activities byas much as half.

But this can only be achieved if insurers link their technologyinvestments to clear business goals.

Innovative Process and Ideas

According to Accenture, “The effectiveness ofany underwriting technology project depends on the quality ofprocess it will support. Is the underwriting process precise,consistent and efficient? Is the insurer spending too much time andresources on business that is non-strategic? Is it giving up toomuch rate in negotiations?”

Accenture notes that nearly 40 percent of underwriters in itssurvey viewed frontline underwriting practices as average ordeficient.

“Once carriers understand process inhibitors to growth, they canbetter draw on innovative ideas, such as new analyticalcapabilities or data sources, to help them think and behave moreproductively with minimal impact to underwriters,” Accenturestates,

Information at Underwriters'Fingertips

Nearly half of survey respondents say there isroom for improvement in accessible, intuitive tools, and sometimesunderwriters can get bogged down in the very tools meant to maketheir jobs easier and more effective.

Accenture says, “Many underwriting environments today arelittered with various tools—software applications, templates,websites, Excel spreadsheets and so forth—designed to 'help'underwriters. It often means that underwriters spend their timejumping from task to task, re-entering data into different tools toreach a decision.”

Solutions, says Accenture, need to focus on integration,delivering the right data to underwriters when they need it. “Everyextra system, tool, data entry and mouse click adds to underwritingcomplexity, inefficiency, cost and a less-than-positive underwriterperception of value from a carrier's technology investments,”Accenture explains.

Modern Operating Model

Accenture says that insurers need to evaluatetheir overall operating models in addition to underwritingprocesses as part of developing a technology solution.

“Particularly, carriers need to know how well their authoritystructure can contribute to business improvement,” Accenture says.“Governance and controls that align to overall process timeframesand goals should be in place to nurture underwritingeffectiveness.”

Greater Management Insight

Accenture says: “Tracking results and leadingindicators across operational, transactional and quality metricsyields insights into underwriting performance.”

Accenture breaks the metrics to track into three categories:operational metrics, which track underwriting efficiency throughpremiums, staffing, systems and data-cost trends; transactionalmetrics, which track sales submissions, quotes and bind-rate databy geography, line of business and market segment; and qualitymetrics, which rely on qualitative and quantitative measures toassess underwriting quality.

Scorecards that analyze these metrics are “integral tomanagement processes,” Accenture says, adding that metrics andtargets should be reviewed regularly “in lock-step with shifts inunderwriting strategy.”

Accenture concludes, “Performance management and governancearound results will help insurers stay on track to achieve businessgoals through the market cycle.” Ultimately, Accenture says, somecarriers will break away from the pack, creating “haves” and“have-nots,” with those investing effectively separating themselvesfrom those unable to keep up.