Technology critical to strengthening commercial insurance underwriting in U.S., challenges remain

More than 500 underwriters surveyed in the United States regard technology investment as the best way to improve the quality of underwriting in commercial insurance, but say the lack of data integration, process integration and technology training are limiting productivity and efficiencies, Accenture reports.

The lion’s share of the 559 underwriters taking part in the survey – 93% – perceive investment in technology as the best way to improve underwriting quality, notes a statement issued Monday by Accenture, a global management consulting, technology services and outsourcing company. In fact, two-thirds of respondents said that technology has significantly improved underwriting performance.

The quantitative online survey, conducted in June 2013, involved senior underwriters, department or product managers, and other underwriting executives. The primary areas of focus were commercial lines (68%), specialty lines (23%) and reinsurance (9%).

Not all survey findings were positive, with 54% of respondents noting that technology has increased their workload. More specifically, 81% of those surveyed said that increased workload was mainly because of a lack of data integration across their company, 67% cited a lack of process integration and 57% pointed to insufficient training.

Technology has brought a step change in the quality of insurance underwriting in recent years, but the full benefits with regard to productivity and efficiency “cannot be achieved without broader data and process integration across the organization,” John Mulhall, a managing director in Accenture Property and Casualty Insurance Services and the management consulting lead for insurance policy services offering in North America, says in the statement.

Questions related to what the technologies are able to do, how they enable underwriters to focus on value-added activities and complex cases, and what training is needed to maximize user adoption must be asked before selecting and implementing any new technology, Mulhall recommends.

Other key findings of the survey include the following:

• 57% of respondents cited process automation when asked what measures they will invest in over the next three years to improve underwriting effectiveness, 51% said predictive analytics for risk evaluation and pricing, and 51% noted external data to evaluate risk;
• 73% of those polled saw more stringent regulations as having the most significant impact on their function in the next three years;
• 72% of survey participants pointed to maintaining underwriting and pricing discipline as the top challenge for underwriters to achieve their business objectives; and
• 58% of respondents cited speed to market as the most important goal driving investments in underwriting capabilities.

On a positive note, 77% of underwriters surveyed reported their organizations have already implemented, are implementing or are planning to implement mobile technologies for customers and for agents.

“Automated underwriting systems offer the promise of better information and greater efficiency through the reduction of re-working and errors,” Michael Reilly, a managing director in Accenture Property and Casualty Insurance Services, suggests in the statement.

Reilly points out that underwriters typically face a number of challenges in evaluating risk, including difficulties in obtaining historical, market and claim information while pricing the risk, disconnected account information, and long and unnecessarily complex communication channels.

“Underwriters must often re-enter data to and from multiple systems and must rely on an employee base that is subject to turnover,” Reilly adds.

“Softening rates and rising expense ratios will expose inefficiencies hidden in a more favourable market,” Mulhall cautions. “Carriers have an opportunity to make investments to address underwriting discipline now, before a soft market cycle fully emerges,” he comments.