The future growth of Anchor General Insurance depended on the carrier's ability to streamline manual business functions, such as underwriting. That's why the writer of nonstandard auto turned to an old friend, DRC, to deliver a business rules solution to automate the underwriting process. "We wanted to streamline our rules and be more consistent with our underwriting guidelines," says John Amat, vice president of information systems with the insurer.
Anchor General had developed a positive relationship with DRC over a 12-year period, and when the decision was made to pursue the automated underwriting process, DRC was one of three vendors the carrier looked to for a solution. "We decided to go with DRC because it knew our business so well and we have a great business relationship," says Amat. "We wanted to partner with someone we trusted."
The selection process took about six months, but the installation was a much bigger issue, according to Amat. "We basically had to go through the underwriters' minds, pick their brains, and determine what they look for when examining risks," he says. Those findings were interpreted into business rules, and the rules then were automated. "We reviewed all the risks the underwriters accept or reject," says Amat. "We took about 1,000 risks and pieced together the decision-making process."
The project took more than two years, recalls Amat, and in November 2006, Anchor General went live with its new automated underwriting solution. "It involved streamlining several processes internally and with our agents, so it was a major project for us," he says.
Removing the manual process performed by individual underwriters, which involved examining each policy, has created great efficiencies for the carrier. The ability to achieve some manner of consistency in underwriting risks was viewed by Anchor General as a major benefit of the product implementation, Amat adds.
"With underwriters, some get the memo and some don't," he says. "There are constant changes in the [underwriting] guidelines. It's quicker and easier to get the changes implemented online and be a lot more consistent."
The solution is working well, Amat affirms, and has allowed Anchor General to turn its attention to other aspects of the application process. Processing policy applications previously took the carrier up to seven days to complete. Today's processing time has been reduced to just five minutes. "What the underwriters are doing now is truly underwriting," says Amat. "A lot of risks are pretty clean, so what [the underwriters] are looking at are risks that really need a closer examination. Those risks now are segmented, and they have more time to study them."
The carrier's initial plan was to process 90 percent of new business through the business rules, explains Amat. Currently, Anchor General is processing about 80 percent of its new business untouched by human hands. "We're tweaking things to get that other 10 percent," he says. "It's a matter of reviewing the business–what we are rejecting and what we're not. We had to get a good sample of what's not being rejected. One of the problems is we need more reporting capabilities and to be able to analyze what we are underwriting."
Ease of doing business is a mantra heard throughout the insurance world these days, particularly among the small and midtier carriers, such as Anchor General, which have to compete against large-tier carriers.
"All the big carriers are doing [automated underwriting], so we had to streamline our process just to stay competitive," says Amat. "The challenge for us was more in developing a new way of doing business. Underwriters are like claims adjusters in that they want paper. They need to touch it and see it. More training [on automating the process] was one of the biggest challenges for us."
Amat asserts Anchor General had little choice but to automate its underwriting process. "This is the cost of doing business," he says. "We didn't have to go through justifications [for the expenditure]. We had to invest in technology to remain competitive. Profit margins are getting thinner and thinner. If your back office is not processing the business efficiently, you are going to get squeezed out of the market."
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