Imagine receiving a routine commercial package submission forone proposed insured—except that the loss history includes 12losses over a five-year period, with three carriers and three linesof business per carrier. In the hands of a superstar agent, itcould take several weeks or more to manually collect this losshistory—and even then, your underwriter would have to sift throughreams of paper to try to make sense of it all.

You might throw your hands up and say that manual loss runs area necessary evil. In fact, there's a more efficient and effectiveway of achieving the same result: automated loss runs, enabled by acontributory database.

Automating Loss Runs with a ContributoryDatabase

Automating loss runs can help carriers improve efficiency,enhance data quality and empower underwriters to make betterdecisions. The key lies in a contributory loss history database: acentralized data repository where every contributor receivesreal-time access to the industry-wide dataset, across allcommercial lines of business. Instead of sifting through paper,underwriters can access the information they need, when they needit. And with standardized loss codes, the data can be fed intoanalytic engines to drive value throughout the policylifecycle.

Automated loss runs can enable carriers to discover profitableopportunities and improve risk selection. In this article, we'lldiscuss another benefit to automated loss runs: reducedunderwriting expenses.

Four Ways That Automated Loss Runs Can Help CarriersReduce Underwriting Expenses

Informed underwriting is a critical competency for carriers, butalso a significant expense. Here are four ways that automated lossruns can enable carriers to reduce underwriting expenses.

1. Increase efficiency

On average, manual loss runs add 5 to 10 days to a carrier'stime to quote. Little wonder that many carriers only use them atpoint of underwriting—and only when they must. It's not uncommonfor carriers to proceed without loss runs for small businesspolicies, when the premiums don't justify the time and costinvolved.

In contrast, automated loss runs help streamline the quotingprocess by getting underwriters the information they need, whenthey need it. In addition, the ease of obtaining automated lossruns makes it economically feasible to acquire them for allpolicies—and to use them throughout the policy lifecycle, not justat point of quote. Finally, participating in a contributory losshistory database makes it much more efficient for carriers to meettheir obligation of providing loss histories to requestingagents.

2. Enhance risk management

Lag time aside, manual loss runs may not provide a completepicture of the risk. Agents might not have written all the lines ofbusiness that a carrier requires, and key information can easilyget overlooked in the shuffle. The worst part is, carriers have noway of knowing if they have all the information they need.

A contributory loss history database can provide historical andcurrent information across all lines of business, including detailson open reserves. At point of quote, carriers can find undisclosedrisks or highlight areas for further inquiry. More broadly, theycan inspect open reserves at point of renewal, or detect signs ofpotential fraud at point of claim. Further, carriers can leverageautomated loss runs at point of endorsement—for example, tounderstand their risk exposure after an insured acquires anothercompany, or to account for mid-policy changes to a commercial fleetof drivers.

3. Improve data quality

Reams of paper. Multiple, disparate data formats. Mundane dataentry. When viewed through the lens of data quality, manual lossruns are highly problematic. Best-case scenario, data entry is apoor use of underwriting resources. Worst-case scenario, mistakeson the front-end can lead to mispriced business, ultimatelyresulting in higher claim losses.

With automated loss runs, carriers get real-time access tostandardized data. This improves data quality and also enablescarriers to leverage data beyond the point of quote, such as inpredictive analytics, claims adjudication, policy renewal andendorsements. Further, carriers that automatically feed losshistory data into rating systems can gain additional efficiencies,and reduce errors due to manual data entry.

4. Better manage talent

Underwriting talent isn't cheap, so why are many underwritersperforming data entry or shuffling paper? Given limited resourcesand increasing pressure to be profitable, it behooves carriers toensure that their underwriters are doing the highest-value workpossible.

By automating loss runs, carriers can triage policies bydelegating simple cases to junior underwriters, and more complexpolicies (such as the one mentioned at the beginning of thisarticle) to seasoned underwriters. Freed of mundane tasks,underwriters can focus on value-added activities. In addition,given the generational transition within the underwritingworkforce, carriers can leverage automated loss runs to facilitateknowledge transfer between seasoned and new hires, or to attractnew underwriting talent.

Looking Ahead

While manual loss runs are almost exclusively used at point ofquote, automating loss runs can help carriers reduce underwritingexpenses and make better decisions throughout the policy lifecycle.Automated loss runs can unlock improvements to efficiency, riskmanagement capabilities, data quality and talentmanagement—ultimately, helping carriers to reduce underwritingexpenses.

Critically, carriers that adopt automated loss runs get more outof their human capital. When equipped with real-time, standardizeddata, underwriters are empowered to make better decisions, drivemore value for the carrier, and work more efficiently andeffectively.

To learn more about our loss history contributory database, aswell as other solutions that can assist you across the insurancecontinuum, please visit www.lexisnexis.com/automatedlossruns.

Ernie Feirer, CPCU, is the vice president and general manager ofcommercial insurance for the risk solutions business ofLexisNexis^®, where he is developing a suite of productsand services for the commercial insurance market.

Feirer has been part of the insurance leadership team since 2000and was named Vice President and General Manager, CommercialInsurance, in 2012. He has held roles as vice president of productmanagement and analytics in the insurance solutions division, andvice president and general manager of the claims solutionsdivision.