The Path to Mastering Collaborative Underwriting
Guest commentary from industry sources Carriers can reach full underwriting capability by combining a modern PAS with an underwriting system with an agent portal.
Insurance Networking News, 09/01/2010
The policy administration system (PAS) is crucial to an insurer's business. However, PASs, new or old, often fall short when it comes to automating and supporting the full breadth of the underwriting and collaboration part of the business.
PAS functions are based on key transactions, including quotes, new business, renewals and cancellations/reinstatements. The system processes rates, logic and regulatory information for all states, coverages and products. It has rules and workflow capabilities to manage back-end integration, sorts data for claims and coverage verification and can sometimes handle billing. A few vendors have delivered more modern systems with Web front ends that capture information for underwriters so quoting, binding, policy issue and subsequent changes can be entered by agents. Some insurers have automated straight-through processing (STP) for personal lines and small, simple commercial business.
Advertisement
So, why are carriers looking for more underwriting and collaborative capabilities? The answer depends on business objectives. For many commercial and specialty lines carriers, underwriting efficiency and improving agent service top the list, making real-time agent collaboration/service, expansive STP, knowledge management, advanced workflow and dashboards missing functions in a PAS.
An insurer may want to consider deploying a comprehensive underwriting system that comes with a Web 2.0 agent portal, and can be fully integrated with the PAS. The combination of a PAS and a next-generation underwriting management system is both complementary and powerful, in addition to providing a fast time-to-benefit. This compelling option helps carriers achievereal-time distribution-channel service, faster quoting, true agent collaboration and/or STP. The approach empowers insurers to focus on competing, differentiating, innovating and growing the book of business.
Mainstreamer, Mover or Master?
The latest research from SMA Strategy Meets Action on P&C underwriting capability highlights an Underwriting Automation Maturity Model. SMA's model guides the discussion about the business and technology capabilities required for carriers to achieve their business strategy and goals, especially in regard to underwriting automation. The model highlights three common intersections of underwriting business and technology capabilities: "Mainstreamers," "Movers" and "Masters."
According to Deb Smallwood, founder of the consulting and advisory firm, a legacy PAS struggles to position insurers as Mainstreamers. These systems perform basic quoting and policy production, but lack a portal or Web front end, and can't support any STP or automated underwriting. Connecting to third-party data services and predictive models poses an even greater challenge. An insurer at a Mainstreamers' underwriting level is using their PAS for automated rating, pricing and even time-to-market improvements. They have basic workflow and rules and may be able to perform some STP with automated rating.
More advanced business and technology capabilities, such as enabling extensive external data services, integration and presenting key internal and external information, or collaborating with agents in real time, help carriers move to the next level. Having a more modern PAS with external data services and advanced workflow gets a carrier almost to Movers' status, but falls short of one-stop shopping, balancing art or science depending on risk, product and line of business. With one-stop shopping, all data and information, along with a variety of tools, business intelligence, analytics, advanced workflows and collaboration, take underwriting to the Masters' level.
To reach SMA's Masters' level of full underwriting capability, with the ability to quickly respond to market changes, enter new markets, launch new products, and align the right level of underwriting automation, an insurer needs more than a modern PAS. This requires a combination of systems, data and tools: modern policy admin, underwriting system with an agent portal, external rating, advanced workflow and rules -and in tandem with advanced predictive analytics, external data services and reporting tools. The combination delivers underwriting one-stop shopping, full internal and agent collaboration as well as dashboards.
The Human Factor
With commercial lines, which have much more complex processes, the PAS handles data capture, basic rating and quoting, but leaves many steps to be handled manually by the underwriter. For instance, with workers' comp, after an agent submits an application, the underwriter will pull and consider supplemental data, such as NCCI, D&B reviews or loss history, and check with the agent to determine pricing. The underwriter then keys in the final discounts, surcharges or adjustments.
Underwriting is at the core of an insurer's strategic business, and should not be handled as a sideline by a system that already does some underwriting. "The art of underwriting is more than just capturing some data and automatically rating and producing a quote, bind or policy," says Smallwood. "New underwriting workstation and agent portal technologies can help automate the more manual part of the process, including the back and forth of the submission/quote process, pulling key external data, capturing underwriter knowledge, and helping to maintain underwriting discipline-and policy admin systems just don't do that."
