A Former Underwriter’s Take on The Insurance Industry Today

This Opinion piece is by Tim Crowe, Director of Insurance Solutions, Eigen Technologies and looks at the true value of data within underwriting.

Ask a group of insurance professionals what they’re tired of hearing and reading about and chances are they’ll answer “data.” Whether it’s big or small(er) data, insurers have heard plenty about the seemingly endless possibilities if only they had a better data strategy.

But after a decade working in the underwriting arena — and currently at the forefront of Eigen’s insurance efforts — it’s clear that a fundamental truth remains unchanged. Data, and every tool dependent on data, is meaningless unless it leads to better business decisions.

As a former SVP of Underwriting at a specialty insurer, I had to make a lot of decisions: which submissions to work on, which ones were worth quoting, how much to charge, and how to tailor wordings. Unfortunately, those decision points were almost always surrounded and supported by antiquated systems that made the underwriting processes needlessly difficult. Manually enter exposure data here, rekey policy information there, repeat ad nauseum.

Nearly everyone in the market recognizes the lack of efficiency in the insurance business, particularly when it comes to specialty lines. Everyone wants to work more quickly and accurately, and write and place more profitable business. Additionally, there’s a growing recognition that the chief issue hindering transformation efforts revolves around data intake and extraction from documents like emails, quotations, survey reports, and policies.

But to upend the way insurance business is transacted — which has largely remained unchanged for decades — so-called technical solutions must actually solve the industry’s root challenges.

The consequences of underwriting inefficiencies

In an ideal world, underwriters would dedicate more time to maintaining relationships with their multiple brokers, accurately assessing risks in real time, and winning new business while retaining profitable accounts. But how can underwriters realistically manage these diverse, mission-critical tasks while also sorting through attachments and documents to compile and enter information into various systems?

The fact that underwriters spend up to 40% of their time on non-core and administrative activities might sound unbelievable. But after years of checking tedious tasks off my to-do list, that percentage certainly seems accurate to me. And the tension and consequences that stem from these inefficiencies run too deep to ignore:

● Brokers grow frustrated collecting and preparing information when they end up not hearing back from underwriters in a timely manner, if at all

● Underwriters become too swamped to service all incoming requests for quotes

● Tedious work and a lack of support lower employee morale and increase the likelihood of key employees leaving

Some observers surmise that the industry’s lack of innovation is a result of stubbornness, but that’s not what I’ve concluded. At Eigen, I’ve had the opportunity to interact with a number of different carrier and broker representatives — and there’s no shortage of intelligence or desire to get this right. More often than not, the problem is that decision-makers don’t know exactly where to start. In some ways, it’s like remodeling a home.

Let’s say you want to add a front porch to your house. You speak to a contractor you know, but they require architectural plans before giving you a ballpark price. You finally find an architect, but in the course of those conversations you realize a construction variance might be required. So now you might need an attorney. With many moving parts to consider, decisions and information overwhelm you along the way — and you don’t know where to begin. You end up delaying the project and tolerate the house as is for now.

3 tips for identifying the right data management technology

Unlike the fictional renovation project, delaying the right technology upgrades can be very risky for an insurer or broker — especially if your competitors are continuously investing and improving processes.

If you don’t know where to start, consider what we believe is the main bottleneck in the underwriting process: the ingestion and digitization of emails and their attachments. This often results in downstream re-keying and manual data entry, bogging down underwriters and their decision-making. If that hits close to home, consider these tips for identifying the correct investment for your business.

1. Establish the “why” behind your tech implementation. Pinpoint the exact issues you want to solve before you begin looking for a tech solution. Talk with your people to discover which inefficiencies most limit growth, and how they hinder it. Once you identify the root causes of the issues your people face, consider whether technology or process improvements are needed and available to fill in gaps. From there, you can narrow down the specific functionalities you expect from a solution.

2. Define your solution requirements. In outlining the requirements for your tech solution, it’s important to gain a thorough understanding of the business you’re in — what solutions exist and which ones are a viable choice for your organization and its unique needs. As you vet solutions and vendors, keep in mind that industry-specific solutions often deliver the best results and support.

3. Consider your internal expertise. In-house resources and expertise are crucial during technology implementation due to logistical considerations (e.g., do you need to overhaul your entire tech stack or can the solution work harmoniously with your current systems?). Equip your team with both technical and insurance expertise to assess solutions and identify one that pushes the business forward. This group will champion your investment over time and bring others up to speed.

The insurance industry is built on trust and human relationships. Machines can never fully replace the expertise of underwriters and brokers, but the right technology can reduce frustrations that stem from onerous and tedious activities. Insurance industry solutions should improve underwriter-broker communications, enabling underwriters to write and place more risks — all while facilitating better relationships throughout the value chain.