Remember watching The Jetsons television episodes inthe 1960s and then the newer versions in the 1980s? George, theloving head of the family, commutes to work in an aerocar thatresembles a flying saucer with a transparent bubble top completewith navigational aids and traffic alert systems, not unlike thosein many American cars today.

Jane, dutiful wife and mother, always tries to create a happylife for her family using a variety of labor-saving devices withlots of buttons to push. The much-loved household robot, Rosie, isan outdated model and frequently spurts and sputters, but theJetsons would never consider replacing her. Jane is in constanttouch with her mother via a video phone. That same video technologykeeps George consumed responding to an endless stream of brilliantnew ideas presented by his boss at Spacely Space Sprockets.

So what do The Jetsons have to do with underwriting?The point lies in the technology, how it is used, and the resultingimpact. While the Jetson family was surrounded with time- andlabor-saving inventions, they did not change the way they workedand lived. George still drove to and from work on a regularschedule. He didn't consult the traffic report until after he foundhimself stuck in a jam. Life was lived in react mode rather thanthe anticipatory mode that should have been possible with all ofthe “modern” conveniences and devices.

Underwriting Automation Opportunity

State-of-the-art underwriting automation today affords theopportunity to do much more than just automate existing proceduresand processes. Phenomenal, far-reaching advances in technology nowmake it possible to vastly improve how work gets done, the timelineto completion, and the quality of decisions. But, as is apparentwhen we watch old reruns of The Jetsons, change is hard.Changing the way we act or the way we react is very difficult.Technology alone doesn't make impactful change happen.

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While the opportunity for change may be profound, the realquestion is, What is appropriate and how do you decide what is thebest level of automation for your business needs? In simplisticterms, automation in the underwriting arena can be described anddifferentiated using three categories or levels:

• No-Touch Underwriting – Commonly referred toas straight-through-processing (STP), no-touch underwriting usesautomated systems to complete all of the underwriting tasks,including risk selection and pricing. No-touch underwriting isprevalent in the processing of standard personal lines policies andsome simple commercial business.
• Low-Touch Underwriting – In a low-touchunderwriting approach, tools and engines assist in the managementand tracking of status and processes as well as provide data andinsights to help the underwriter make a more informed decision.Low-touch underwriting is often used to handle exceptions that arekicked out of personal lines STP systems. It is possible to processall but the most complex commercial risks using a low-touchmodel.
• High-Touch Underwriting – With a high-touchunderwriting approach, the underwriter is directly involved in theevaluation, negotiation, and pricing of the risk. Some automationmay assist in workflow management and diary ticklers. This hastraditionally been the predominant underwriting model.

More than a few insurers embark on a plan to automateunderwriting without really understanding that different levels ofautomation are possible. Others set objectives for automatedunderwriting and even invest in a solution path, only to laterlearn that one part of the organization assumed the end resultwould be high touch and another part of the organization expectedno touch.

What's Best for Your Organization?

Unfortunately, the decision about what level of automatedunderwriting is the best for an individual organization is notalways easy to determine. For most companies, more than one levelwill be required. The level of automation that is appropriatevaries by a number of factors:

• Lines of business
• Size of the risk(s) involved
• Complexity of the risk(s)
• Maturity of analytics that can be applied to help automate theactual underwriting of the risk
• Maturity and availability of the specific data that is neededto comprehensively and successfully underwrite therisk(s)

And then—there is the reality check! While the capability existsto provide significant risk selection and pricing guidance, managecheckpoints, and assist in the decision-making process for even themost complicated underwriting risks, in many cases the industry issimply not ready to accept it.

Like in The Jetsons, thinking differently is not easyfor insurance underwriters and leadership. Change is tough toimplement. The key is to match the needs of the business with anappropriate automation plan. That plan must be able to deliver thevalue that is needed to achieve strategic goals, with investmentsthat match the organization's ability to absorb and capitalize onchange.