Cutting your hair makes it grow faster. Thomas Edison invented the light bulb. Humans use only 10 percent of their brains.

Most people assume those statements to be correct because they are so often repeated. As it turns out (and as a quick online search will demonstrate), none of those statements is accurate; they are all myths. And like all good myths, they seem to persist, regardless of how often people try to dispel them.

The same is true of myths about underwriting technology for property and casualty insurance. While not as universally known, two myths about underwriting technology endure. The first is that a modern policy management system offers all the underwriting capabilities that carriers need. And the second is that integrating an underwriting management system or underwriting workstations with existing insurance technology platforms is typically too complex, time consuming, and expensive to make sense.

Clearly, advanced policy management implementations have enabled countless process improvements and have provided insurers with insights into their customer base they never had before. At the same time, there is an underlying belief that the newfound information and functionality in policy systems also fully satisfies the unique needs of underwriters. But that’s not the case—because underwriting and policy management systems have distinctive functions. And that’s the essence of the first myth.

Quite simply, underwriting workstations are designed to evaluate risk more accurately and quickly. The technology provides the structure and tools necessary to enforce consistency across all product lines. Automated underwriting rules can capture the expertise of the organization’s best underwriters, allowing insurers to better integrate newer underwriters and to effectively set and monitor the risk appetite of the organization as a whole.

Additionally, underwriting workstations allow streamlining of the application process, making carriers more efficient and responsive. Agents and brokers can work collaboratively with underwriters, in real time. Straight-through processes utilizing built-in underwriting standards allows carriers to provide instant quotes. Insurers can experience lower loss ratios through better risk selection and more accurate pricing. And the technology can lead to more business through faster turnaround times. All of those benefits result in happier policyholders and more business—advantages and features that the limited underwriting functionality in policy management systems do not offer.

Policy management systems are just not built to support complex and increasingly data-driven underwriting processes. While a good amount of useful data for underwriting can be pulled from a policy management system, the availability of data by itself does not equate to underwriting prowess. Indeed, policy management systems lack the deep functionality and contextual power to be effective underwriting platforms for the challenges of modern risk evaluation.

Dedicated underwriting workstations are designed to bring together a host of data assets from internal and external sources so that underwriters can have all the appropriate information they need to make quick and accurate decisions.

By bringing all relevant data into one place, underwriting workstations allow underwriters to use the time they would otherwise have spent gathering information to focus on the key aspect of their jobs: combining the art and science of precise risk evaluation. To amplify the clear benefits offered by underwriting management systems that integrate data and complement existing systems, a recent FirstBest study found that 50 percent of the underwriters surveyed must access four or more systems during the underwriting process. Underwriting workstations can significantly reduce this reliance on multiple systems; they are designed to streamline the underwriting process, integrating with data providers to gather and store the information that underwriters need to properly—and efficiently—qualify, assess, and price risks.

In today’s increasingly electronic world, modern underwriting workstations allow carriers to harness big data to gain deeper insight into the risks they’re writing. The ubiquity of data sources offers the opportunity to leverage predictive analytics not only to capture valuable structured and unstructured risk data, but also to quickly put that data to use for better risk assessment.

The availability of data by itself does not equate to underwriting prowess. Policy management systems lack the deep functionality and contextual power to be effective underwriting platforms for the challenges of modern risk evaluation.
And yet, there is no cause for carriers to abandon investments in policy management in favor of underwriting technology. On the contrary, underwriting workstations alone will not deliver the service imperatives, profitability goals, and growth trajectory that carriers need. The real value comes in harnessing and integrating a modern underwriting workstation in conjunction with policy management systems.

“The reality is that advanced underwriting solutions and technologies coupled with a modern policy administration system create a powerful combination that delivers a tangible competitive advantage,” according to Deb Smallwood, industry expert and founder of consulting firm Strategy Meets Action.

Smallwood’s point brings us to our second myth: that integration of underwriting technology with existing systems is far too complex to yield meaningful improvements in a cost-effective, efficient manner. But in recent years, that myth is being repeatedly dispelled with extensive implementation experience across all markets, including regional, national, and international insurance organizations and their distribution partners.

Many insurers cannot rationalize a wholesale replacement of their existing systems and have already made significant investments in new technologies. To address those conditions, modern underwriting workstations are designed to be deployed quickly—even in three to six months. The reality is that implementation is far easier that most people believe, and the end result is a rapid, seamless integration with existing systems.

A recent article in Carrier Management by Ernst & Young’s Gail McGiffin and Kurt Schulenburg looked at the best practices of those insurers who successfully integrated the two systems. While the authors acknowledge integration can sometimes be a struggle, they also stress that understanding the different roles of underwriters and policy administrators is imperative. This is consistent with the first myth we explored earlier. The EY experts add that successful underwriting and policy management solutions depend on strong alignment between the business and technical aspects of account processing, data handling and rules management.

Dedicated underwriting workstations, particularly when combined with powerful policy administration systems, can lead to significant efficiencies and growth for carriers. And that is no myth.

Topics Carriers InsurTech Tech Underwriting