Singing The SEMCI Song

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Could a shortage in underwriting talent boost the quest forsingle-entry, multiple-carrier interface? That's one hope inspiredby an intriguing study from New York-based Conning Research &Consulting, titled “Executing Commercial UnderwritingAutomationIt's Only a Tool.”

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Conning concludes that while property-casualty carriers arebuilding proprietary underwriting solutions, they will not beviable in the long term, in part, because insurers lackunderwriting manpower.

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“Commercial insurers are spending lots of money trying toautomate a system that for years has been dominated by trainedunderwriting professionals, and those ranks are thinning,” saidMichael Weinstein, director of research at Conning.

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“While insurers do not identify a pending underwriter shortageas reason for pursuing automation, we expect that the currentworkforce of front-line underwriters will have a much smallernumber of replacements when they retire or otherwise leave thesepositions,” Mr. Weinstein noted.

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As a result, he said, “product differentiation will no longerlive at the front-end of the process. Success will be dependentupon information-gathering and back-end-supported analyses drivingsophisticated pricing models.”

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The Conning analyst predicts that these dynamics “will force anaveraging of data requirements,” which would at last make SEMCI–theHoly Grail for many in the insurance world–a minimum standard forinsurers and independent agents. This evolution will ultimatelyminimize the ability of carriers to employ proprietary datacollection differences as an advantage, Conning added.

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Mr. Weinstein predicts that underwriters will grow increasinglyreliant on automation to speed up the process, because “inevitably,an insurer's failure to respond to agents rapidly and reliablycould soon disqualify it from the standard marketplace.”

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This is sure to be music to the ears of independent agents, aswell as their allies in the battle for standards. However, since wehave heard this song before in different keys, we will believe thedemise of proprietary carrier systems when we actually see it. Butwe can't help but hum along and hope Conning's crystal ball isright.


Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, June 30, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.


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