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Accenture surveyed more than 550 commercial underwriters about the role of underwriters within their organization and the technology they use to make decisions. This summary provides an overview of the findings.
Nearly 90 percent of commercial carriers are currently investing in their underwriting function or plan to do so over the next three years. Yet, what impact are the investments yielding for carriers toward more efficient, effective underwriting?
To answer this question, Accenture conducted a quantitative online survey of more than 550 diverse North American commercial lines, specialty lines and reinsurance underwriters. We asked them about the major challenges they face today, the effectiveness of historical technology investments, and areas of focus for the future.
From the survey results, three primary findings emerged.
Maintaining underwriting and pricing discipline is the top challenge for underwriters
To improve their underwriting function, the majority of carriers are investing in process automation, predictive modeling, data verification and collaboration tools.
Effectiveness and efficiency of underwriting technology is lagging
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The survey indicated there are three main findings:
Maintaining underwriting and pricing discipline is the top challenge for underwritersNot surprisingly, respondents cited maintaining underwriting and pricing discipline as the most fundamental underwriting challenge to address. This challenge will only come under more pressure as the current hard market cycle begins to soften over the next couple of years. Softening rates and rising expense ratios will expose inefficiencies hidden in a hard market. However, despite these investments, only 43 percent of responding organizations have automated 70 percent or more of their underwriting processes.
Carriers are making significant investments in new underwriting technologyTo improve their underwriting function, the majority of carriers are investing in process automation, predictive modeling, data verification and collaboration tools. Already, some middle market carriers have been ramping up their use of telematics for commercial fleet business and are seeing accident reductions of 15 to 20 percent through alerts, coaching and behavior modification. Those that are not making such investments could be left behind. Only 43 percent of responding organizations have automated 70 percent or more of their underwriting processes.
Effectiveness and efficiency of underwriting technology is laggingJust making the investment in underwriting technology is not a panacea. Half of underwriters believe new technologies implemented have not met effectiveness expectations. Additionally, more than half feel their workload increased because of technology, owing to a lack of data integration, lack of process integration and insufficient training.
Keys to winning the race: effectiveness and efficiency of technology investmentsAs the survey results show, a key focus of technology investments needs to be on effectiveness of execution—confirming that the solution being developed indeed improves underwriting efficiency and performance rather than just adding another tool to the process.
Drawing on our experience working with global carriers, Accenture identified five core traits that can enable carriers to get the results they need from their underwriting investments. For example, a modern operating model—one of the five traits—provides for governance and controls that align to overall process timeframes and goals that nurture underwriting effectiveness. In the survey, both insurance underwriters (82 percent) and management (84 percent) rate underwriter controls as important or very important.
Ultimately, carriers that break away from the pack will be the ones that get the most out of their underwriting capability investments.
October 25, 2013
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