Tag Archives: intuitive

The 5 I’s of Underwriting

The benefits of next-generation underwriting for complex risks are quantifiable and real. So, when, where and how to start?

When? Now. The sooner, the better.

Where? It all starts with understanding the possible. You need to know what is realistically possible with the offerings that are available today. It is equally important to figure out what will be possible in the not too distant future. Once you’ve got a grip on the possibilities, it’s time to set priorities. Describe the capabilities that go on the priority list using business terminology. This makes it much easier to have meaningful conversations between the business and IT interests. It is very important to look at how your plans for underwriting will align and work in concert with your policy administration system. Figure out what the best path for your organization is, and then just make it happen.

How? The most effective path for making progress depends on the characteristics and culture of the company. For some insurers, shifting focus to the possibilities for underwriting gets things moving. Other organizations might need some help or just a kick-start. You can move the ball forward significantly by bringing in advisers who can describe what the options are and then put the value in context for your company. The important thing is to make progress one way or another. Time is of the essence.

Simply put, the goal of underwriting is to maximize efficiency and effectiveness. SMA’s concept of modern underwriting capabilities can best be described by using the 5 I’s: Intuitive, Intelligent, Interconnected, Informative and Insightful. The next-generation insurers are embracing solutions that embody these characteristics, and they are reaping the benefits.

What do these 5 I’s mean for you? Let’s explore:

Intuitive — A user-experience-centric desktop, an intuitive desktop, saves time spent hunting and searching for information, and it eliminates rekeying into several systems. It also reduces the learning curve and ties directly to the main goals of underwriting: efficiency and effectiveness.

Intelligent — For complex risks that require the touch of an underwriter, the modern underwriting workstation can significantly augment the expertise and experience by incorporating and taking advantage of new sources of data and models. This new level of intelligence automation will help make better decisions and provide controlled discipline.

Interconnected — Modern underwriting capabilities are delivered through a variety of solutions that are tightly integrated with everything underwriting needs and feeds. The required capabilities extend beyond what a single solution can deliver. The requirements include an interconnected, intelligent, modern platform that facilitates easy integration and synchronization with core systems, tools, spreadsheets, models and data, as well as external data sources.

Informative and Insightful — Modern platforms provide underwriting with data and analytics like never before. Emerging technologies, as well as an abundance of new information, are generating new possibilities for underwriting and new ways to accomplish far-reaching transformation for the next generation of underwriting excellence. It is now possible to make smarter, more informed decisions by using new sources of data and models. New levels of sophistication in the information about both risk and customer intelligence are possible.

Looking back on my past-life as an insurer, I am in awe of today’s possibilities. The power that data and analytics are giving our industry is boundless. Just thinking about how far underwriting has come in a very short time makes me even more excited for the future! This is why at SMA we consider “Interconnect Intelligence for Underwriting” an imperative. It is critical to becoming a next-gen insurer. The world is moving as fast as we think it is. Any steps you can take to gain an edge by improving efficiency and effectiveness are must-take steps!

How Private Health Exchanges Can Win

As the various public healthcare exchanges have gained more publicity, employers are increasingly aware of the availability of their private sector counterpart.  A legion of brokers, third party administrators and experienced legacy benefit administrators are striving to reconfigure and brand themselves as a private healthcare exchange (PHX), providing service to employer groups rather than individuals.

However, the genuine article is nearly nonexistent. Out of the nearly 100 companies that are identified as a PHX, only a few possess the technology, industry knowledge, backing and other necessary qualities to succeed over the long term.

How is the investor, carrier or broker able to evaluate a PHX for partnership and ensure he picks not only a survivor but a winner?

There are three essential capabilities any contender must possess.

  • Intuitive shopping experience (i.e. Amazon)
  • Multiple medical carrier and plan options
  • Direct integration of consumer-directed account(s) in both the shopping and enrollment processes

Intuitive shopping

The PHX experience must model other consumer Internet shopping experiences in all aspects for universal adoption. If a PHX is unable to do this, brokers, HR administrators and other service providers will engender unsustainable, escalating costs while providing little service. A PHX must move to the self-service model of e-commerce.

It is unlikely that the insurance industry, so mired in its own protocols, can design such a system on its own. For the PHX industry to thrive, outside experts from e-commerce must be welcomed inside the business to effectively couple their expertise with that of individuals with deep knowledge of the employee benefits sector.

Multiple options

It would seem intuitive for an employer to offer employees a range of national and regional insurance carriers. Yet the health insurance industry has always gravitated to restricted choice. It is a golden scenario for a carrier to have enrollees choosing exclusively from its options in an electronic marketplace. This leaves brokers in a precarious position. Although they currently control the health insurance marketplace, brokers are vulnerable to the almost certain risk that the current carrier will raise rates; brokers may lose clients or have to abandon the platform and seek another carrier.

The problem is further complicated by several factors. Carriers require digitalization to facilitate rating, enrollment, eligibility and billing. Retroactive risk adjustment is often required to account for employee population variables. Finally, and perhaps most importantly, individual state “exchange shops” mandated for small groups under the Affordable Care Act all have multiple medical carrier options, raising the bar for private healthcare exchanges.

High-deductible health plans coupled with health savings accounts are now approaching 50% of plan populations after languishing for years with only 5% to 10% adoption rates. Although the reasons for this increase are not necessarily clear, the statistic is well-documented, as illustrated in the May 2014 joint study by John Young and Todd Berkley. It is clear employees making unfiltered decisions are voting with their feet. Consumer-directed accounts (read health savings accounts) can no longer be treated as just a minor option for early adopters.

Integration of accounts

While the consumer may choose a high-deductible plan, it is quite possible that when the first claim happens there will not be funds to pay it. It is imperative that the consumer bank account is enrolled concurrently with enrollment into the medical plan. This does not take place in most situations today. The importance of assessing other mechanisms of providing the consumer liquidity cannot be overstated as a means to ensure accounts are adequate to pay claims under deductible or co-pay responsibilities.


While there are stiff challenges, an incredible opportunity exists to offer a PHX that is an integrated, superior product that belies the complexity underlying the system it serves.