Rethinking Underwriting for Commercial Lines

It is time to step up automation in commercial lines, and you can do just that with a powerfully rich combination of enhanced technology capabilities in the key areas of underwriting and policy administration – a combination that lowers cost, simplifies doing business, makes it easier to enter new markets and significantly improves underwriting outcomes. Modern policy administration systems for commercial lines have matured and expanded. Many now offer automation assistance to a few aspects of the underwriting process, and a handful even address select parts of the quoting transaction process. But the news is that exciting, next-generation underwriting technologies and solutions are delivering automation directly to the desk of the underwriter and assisting in the management of the entire underwriting process. These capabilities are enabling more insightful and timely service to the agent: a significantly streamlined process and workflow; rapid, if not immediate, turnaround of quotations; precision pricing; better risk selection – all in a user-friendly, collaborative environment. While all commercial lines insurers are able to benefit from some level of increased underwriting automation, this enriched level of underwriting finesse is particularly important to insurers that are writing mid- to large market risks and even highly specialized and complex risks, especially those that require negotiation and collaboration with the agent or broker. Insurers that are not paying close attention to what is being implemented by some of the market leaders are likely to be burdened with higher underwriting expense and saddled with less effective underwriting outcomes. If this automation plays out as projected, it might become a continual struggle to match the level of service that leaders are providing to agents and brokers – a struggle that could leave some insurance companies in the dust. So why haven't all commercial insurers installed these next-generation underwriting technologies and solutions – the very approaches that would put them in a leadership position or at least enable them to keep up with the mainstreamers of tomorrow? The answer boils down to a disconnect in linking desired business capabilities to the available technology capabilities and, perhaps of more importance, two major misconceptions. First, there is a misunderstanding relative to what a modern policy administration system can do for commercial lines underwriting. Some mistakenly believe that a modern policy administration system can and will provide next-generation underwriting automation for the underwriter. Second, there are misperceptions about the complexity involved in managing any overlaps or duplications that exist between the policy systems and underwriting solutions. The reality is that advanced underwriting solutions and technologies coupled with a modern policy administration system create a powerful combination that delivers a tangible competitive advantage. It is indeed possible to transform the commercial lines underwriting process. This is a maturing area for solutions with new entries in the marketplace. These solutions now offer a rich and complete set of capabilities specifically designed for commercial lines underwriting – solutions that align well with the changing needs of the business and also capitalize on developing opportunities. These solutions really step it up for commercial lines insurers by applying the right level of automation to properly balance the science and the art of underwriting, to deliver real competitive advantage today and place desirable business that stands the test of time on the books. Insurers seeking new capabilities need to look closely at these new offerings. Yes, the overlaps with what a modern policy administration system does are real, but this can be managed without great difficulty. Any perception of extreme complexity is typically misguided. The value an insurer can achieve from the powerful combination of a modern policy system and a complete suite of advanced underwriting solutions will far outweigh any effort involved. I have been conducting research on, tracking, and reporting on both underwriting and policy administration capabilities in commercial lines for more than 13 years. These are exciting times for the industry. Real opportunities for stepping up to the challenges of the increasingly complex world of commercial insurance are here. The smart insurers will capitalize and become intelligently nimble – realizing their reward in profitability and market share. The rest will follow, struggling to catch up and stay in the game.