Report Touts Automated Underwriting

A new report from Celent, a Boston-based financial research and consulting firm, has found that underwriting automation can deliver significant productivity improvements.

The report, “Automating Commercial Underwriting: Overview, Best Practices, and Case Studies,” looks at how commercial lines insurers are benefiting from automating the underwriting process.

According to Celent, underwriting automation can deliver benefits to insurers' underwriting cycle time, productivity, staffing levels and leakage.

“Some insurers writing small commercial business have been able to increase their average premium per underwriter by as much as 100 percent” from approximately $5 million to $7.5million to $10 million, the report noted.

“There are even larger gains for insurers writing mid-market business: 100 percent to 200 percent. Other insurers have had more modest gains of 25 to 35 percent,” the report said

The study also found that the reason underwriting automation works for personal lines is the broad availability of relevant technologies. These include rating engines; automated retrieval of external data, generation of underwriting scores, direct bill plans and document management applications to create policies and declaration pages, and print management programs for printing, assembly, and mailing.

While there has been substantially less automation of the commercial lines underwriting process, the report noted, much of the same technology pioneered on the personal lines side is now being introduced into the commercial market.

“Insurers are now deploying technology to realize the significant business benefits of automating the commercial lines underwriting process,” said Celent.

The report added that in order to realize greater operational and financial benefits, insurers will have to make investments in both technology and organizational development.