Insurers Failing To Invest In Underwriting

NU Online News Service, Aug. 28, 3:17 p.m. EDT

While insurance companies have made technology investments to strengthen relationships with agents, they have not invested in systems to help their underwriters achieve high performance, a recent Accenture report said.

The report, "Achieving High Performance Through Underwriting: It's Time to Move Beyond the Status Quo," was undertaken with the CPCU Society and based on a 2008 survey, an update from an earlier 2005 survey. It said insurers have put technology to work to increase agent loyalty. For example, the report notes that more than 95 percent of commercial and personal insurers have implemented or are in the process of implementing agent upload and download of policy information, as well as enhanced Web quoting and inquiry tools.

But the report states, "Unfortunately, results suggest that while some progress has been made, technology has not been brought fully to bear on underwriting practices."

Additionally, Accenture noted that training activity has dropped off since 2005, and "a major misalignment exists between what underwriters feel they need to succeed and what their companies provide."

In 2005, Accenture said, underwriters identified five areas--risk selection, data verification, rating and pricing, book management, and product development--that have a high impact on their jobs and are in need of change. By 2008, however, "few companies had made the necessary investments to automate these five functions," Accenture said.

Companies have, however, indicated that they do plan to invest in underwriting technologies over the next year or two. Accenture said, "While underwriters appear to have received short shrift compared to agents when it comes to putting technology to work, it is encouraging that the survey indicates planned investments over the next 12-to-24 months to address the system inefficiencies and gaps. However, it is also clear that improvements must also be made in how these insurers build, introduce and maintain these underwriting technologies."

Beyond just investing, companies must show an understanding of these technologies. For example, Accenture observed that for those that invested in technologies for agency relationships, many have reported that the effectiveness of these technologies is falling short of expectations.