Underwriters in the commercial market are, in some ways, facing a promising future: Valuate Reports recently estimated that the segment’s compound annual growth rate through 2028 would be 8.5% — a healthy clip by any standard. This is far above the overall average direct written premium (DWP) growth rate of 3% to 4% over the last decade or more.
Yet market research indicates that, while commercial carriers are adopting digital technologies and next-gen core systems at a rapid pace, age-old manual underwriting processes and lack of relevant data when they need it continue to cause bottlenecks and friction, leaving customers, underwriters and brokers frustrated.
Businesses insurance premiums are now at $350 billion annually, but the workflow generally remains paper-based. Only 25% of an underwriter’s day is spent on selling and broker engagement. Underwriters are spending entirely too much time on core processing and other non-sales work.
Imagine if underwriters could spend more time with their customers and focus on delivering a better customer experience instead of being bogged down by cumbersome, error-prone manual processes and information gathering. Imagine having intelligent, relevant information pushed to the underwriters’ fingertips at the exact moment they need it, empowering them to make better decisions.
As an industry, we are on the cusp of making this vision a reality. SMA research indicates a gap between what insurers do today and what is needed today and in the future. In fact, 80% of insurance executives expect underwriting roles to be significantly different in the next five years. They know they must evolve underwriting to make their companies competitive amid the rapid changes in customer needs and expectations, new digital technologies and data sources and increasing competition from both established players and new entrants.
This evolution will be powered by a next-generation underwriting workbench that leverages an easily customizable and scalable digital platform, robust data-ingestion capabilities, AI and machine learning and new communication and collaboration tools across commercial and specialty lines of business.
In addition to tedious, time-consuming tasks of manually gathering data, the most glaring pain points to be addressed are:
- A lack of an integrated and unified view for underwriters to access risks and make quick decisions
- The absence of holistic policy data at a single place to enable quick and accurate underwriting case management
- An overdependence on underwriters for making key decisions
- The lack of sufficient time for underwriters to develop relationships with distributors, given inadequate system capabilities
- Inefficient collaboration and communication channels between underwriter and distributors
- A need for constant follow-ups with line managers for updates, resulting in longer waits for closing out open cases, leading to poor experience
Progress depends on the creation of an end-to-end underwriter workflow and case-management capability. It requires a capability for intelligent data ingestion and extraction, coupled with standardized and automated processing.
A key in making underwriting work better, faster and in a cost-effective way is increased and predictable collaboration between the broker/agent and the underwriter. Ultimately, there is great value for the business by being highly responsive to customers through transparent collaboration among underwriters and brokers.
Next-generation underwriting capabilities are here. The challenge for the industry is in adopting a mind-set that permits digital transformation to take root and grow.
We believe performance excellence will flourish when insurers embrace change, leverage powerful new technologies and adopt new ways of working that are evolving at a rapid pace.
Mike Adler, principal, KPMG, and Denise Garth, chief strategy officer, Majesco, are co-authors of this article. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities