A survey of 800 underwriters has revealed that technology not properly utilized may actually increase underwriter workloads, and that even where technology is functioning effectively, it may be supporting outmoded underwriting practices.
New York-based Accenture said it worked with the Chartered Property Casualty Underwriters (CPCU) Society in surveying underwriters representing some 300 different carriers. The study sought to identify critical underwriting trends and issues and to assess technology's impact on underwriters' ability to perform more efficiently and effectively.
According to Accenture, the findings add up to an industry that is "underprepared" to respond to evolving market conditions. Applying technology to key areas of underwriting, however, would bring "the discipline needed to sustain the alignment of pricing, terms and exposures, even under the pressure to grow."
The company noted that "high performance insurers" are retooling underwriting practices and redefining their risk appetites and products, then applying technology to institutionalize those practices and strategies.
"Technology has the potential to decrease the underwriter's workload and improve the quality of their decisions, yet for many carriers, technology has no impact," the survey report said. "Remarkably, for 44 percent of respondents it has increased the workload. In contrast, high performance insurers have applied technology to automate repetitive tasks and to speed the process of…decision-making. This is not simply about more or newer technology; this is about smarter utilization of technology."
The results of such utilization, according to the report, include reduced underwriting leakage, lowered expenses and improved profitability along with "dramatically improved leverage ratios for premium handling per underwriter."
Among the findings characterized by Accenture as "compelling" were:
o For many insurers, the application of technology has consisted of point solutions that have tended to increase, rather than decrease, underwriter workloads.
o Where carriers have invested in technology, systems are functioning effectively, but they may support outmoded underwriting practices.
o Personal lines and small commercial lines carriers have applied technology to the underwriting process more so than middle market and large account commercial insurers. Even personal lines and small commercial account insurers continue to operate with "suboptimal technologies and have yet to apply technology to several processes that could benefit from automation."
The survey results indicate there is still "a huge opportunity for insurers to automate manual processes and to close the gap between partially automated and fully automated underwriting functions to help improve underwriters' effectiveness," said Gail E. McGiffin, a senior executive in Accenture's insurance practice. "Insurers should address outdated underwriting practices and apply cohesive technology to automate repetitive tasks and better leverage data for decision-making."
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