Data and analytics serve to predict consumer behaviors and the future behavior of the underwriting process, and results of a recent FirstBest Data-Powered Underwriting Study reiterate the importance of data and analytics for driving profitability and better risk decisions.

According to the survey 56% of respondents state that superior data access can directly lead to profitable underwriting results, and 49% agree that other benefits from data use drive improved better decision-making and improved underwriting quality.

But despite the importance of data and analytics noted by survey participants, only 11% of carrier respondents indicate satisfaction with their current data and analytics capabilities, with 89% indicating varying degrees of dissatisfaction with their current strategy.

While data and analytics are valuable in predicting the future of the market, a third of companies provide access to less than 25% of their underwriters. When asked, "What percentage of your underwriters has access to data and analytic tools," 43% of survey respondents observed that less than half of their underwriters have appropriate access to analytic tools in the current front-office technology setting.

Top survey responders indicated that an expanded, more convenient access to data in general, particularly third-party data, would help drive the integration of data in the field. Furthermore, the survey reveals that more than 60% of carriers acknowledged higher spending on data and analytic capabilities this year, but the investment does not necessarily return the desired data-driven results for prompt and precise underwriting. Approximately 75% of survey participants denoted that data and analytics quality, accessibility and consolidation is a key need moving forward.

But due to a lack of "integration" and limited data expertise, the implementation of data in the decision making process can be hindered or nearly impossible. For many carriers, according to the survey, integration is manual, with underwriters, techs and admins all attempting to obtain and piece together disparate data from different systems. The problem for insurers, then, is obtaining data and analytics, and delivering them quickly in an applicable form to the underwriting process.

"Insurance carriers are increasingly incorporating data assets in their underwriting processes, but they are also often impaired by the task of prioritizing and integrating a sea of data for productive risk assessment and submissions," said John Belizaire, FirstBest CEO and founder. "In fact, carriers are increasingly relying on dedicated, rules-driven underwriting workstations at the point of decision — and in collaboration with policy management systems — for actionable data and predictive analytics to help increase the speed and quality of risk decisions in mission-critical underwriting."

Data and analytics are used to predict the future behavior in the underwriting process, but the survey claims that they tend to be more backward-facing when they come out of the underwriting process. This indicates that the opportunity for growth and development lies in capturing and analyzing the "data out" that comes from the underwriting process and marrying it with a variety of internal and external data. By feeding that data back into the underwriting process, FirstBest predicts better, more profitable underwriting decisions as a result.

In order to leverage the opportunities of data and analytics, the report suggests a three-step strategy to enact data-driven underwriting for more profitable results.

First, the study suggests to drive data to the point of decision. By using underwriting workstations to bring together all of the data and analytics that the underwriter needs into one place, the deliverance of fingertip access can assist in making the data accessible and easily applicable. Unlike policy administration systems, an underrating workstation would specifically be designed for underwriting teams.

Furthermore, these workstations go beyond data aggregation. They implement rules to automatically obtain the right data related to the risk, before the underwriter even asks for it, presenting the data within the context of the underwriting process. This enables underwriters to harness the power of data without having to be a data expert, according to the survey. Establishing a rules-driven process ensures that each underwriter uses the right data to make decisions every time, causing underwriters to make better decisions and produce more profitable results.

The second strategy the survey presents is vested in allowing data to drive the process. The power of the data extends beyond fingertip access, as carriers use data to drive parts of the underwriting process as a whole. For example, underwriting workstations use business rules and workflow to harness the power of data and analytics in establishing the next steps, including whether a manager referral is required, predicting which additional data needs to be obtained, creating checklist reminders and much more.

But within the underwriting function, successful companies implement data hubs to bring disparate data together from various sources, including claims, policy, and third party sources. The data hubs serve to normalize the data and automatically deliver the data and analytical capabilities directly to the underwriters at the point of decision. Therefore, instead of wasting time hunting for data, underwriters can access more data in the underwriting process to make better decisions in less time.

This process also allows companies to extract data from the underwriting process, and by combining it with claims and other data, information can be pumped back into the underwriting process along with new and valuable insights, creating a continuous cycle and fostering better decision-making.

"As more and more data and analytical tools become available, insurers must determine not only what data they will use but also how and when they will use it," according to Belizaire. "Our recent survey and market experience validates that too often underwriters need to scour a variety of sources and systems to get the information they need. Particularly for complex commercial risks, underwriters must often manually seek and move information from one system to another in fragmented procedures that can lead to errors, delays, and disruptions in winning and renewing business."

The FirstBest Data-Powered Underwriting Survey questioned a section of 58 respondents from both commercial and life/health insurers. Participants included carriers of various sized, representing management, underwriting, business operations and IT.

Special Reports /

Survey: Only 11% of carriers satisfied with current data and analytics capabilities

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