Insurers in North America are keen on bolstering their underwriting function. Nearly 90 percent are investing in their underwriting function or plan to do so over the next three years. To find out just how well the investments are paying off, Accenture polled more than 550 North American underwriters on the major challenges they face, the effectiveness of historical technology investments, and their areas of future focus. This and my next few blogs highlight implications of the survey findings.
Overall, three primary findings emerged:
- Maintaining underwriting and pricing discipline is the top challenge for underwriters, which is bound to become more pressurized as the current hard market cycle begins to turn.
- Investments in new underwriting technology are significant. Most carriers are investing in underwriting automation, predictive modeling, data verification and collaboration tools; those that are not could be left behind.
- Effectiveness and efficiency of underwriting technology is lagging.
What is particularly important for insurers, I believe, are two distinct differences from the last underwriting survey we conducted back in 2008.
The good news is that scores on the quality of underwriting tools were up across the board—most everything from underwriting strategy to the tools and systems that support underwriting to training programs graded out higher than in 2008. It means that carriers are progressing in the right things. We are seeing lots of new technologies and tools which is contributing to more collaboration and communication around underwriting and pricing strategy. In fact, respondents said that new underwriting technology is the most important area for investment in improving the quality of underwriting results (figure 1).
FIGURE 1. When considering how to improve the quality of your organization’s underwriting, how would you rate the importance of each of the following areas?
The not-so-good news is that there is a significant decline in the impact of new technologies for underwriting. More than 50 percent of underwriters say that new technologies increased their workload—20 points more than in 2008. Simply introducing new tools and technologies is not enough. They need to be integrated effectively into the underwriter workflow. Lack of data integration, process integration and training on the new tools were the top reasons cited for the increase in underwriter workload. While the intention is good—wanting to give underwriters new tools to help them do their jobs better—the abundance of new information sources for underwriters has not lead to efficiency gains. At least, not yet.
Over the next few weeks, I will be examining other survey findings and they may help insurers make wise investments. I hope you’ll revisit the blog regularly.