Desktop Driven Underwriting Transformation

Insurers across the industry agree that underwriting and pricing capabilities are the most important and potentially valuable in terms of future investments. Efficient and effective underwriting along with better pricing will deliver profitability while also contributing to a reduced combined operating ratio and a higher return on capital.

Focusing Underwriting related investments on managing risk and premium-to-exposure profitability will allow carriers to remain competitive in an already saturated and commoditized personal lines insurance landscape. In addition, with the growing disruptive presence on InsurTechs, the need for a transformational Underwriting operating model has become table stakes in order to remain relevant in the continually evolving insurance marketplace.

Strategic Factors and Optimizations

In today’s Personal Lines insurance space, there are several key strategic factors driving the need for transformational investments. The key competitive factors are:

  • Growth (DWP, PIF)
  • Distribution models
  • Efficiency (reduced costs)
  • Effectiveness (management of the book of business)

From an Underwriting perspective, to make improvements within these competitive factors, requires optimization across the entire Underwriting lifecycle in the following key areas:

  • Application Completion (strong front-end rules)
  • Risk Inspection (risk-variable)
  • Communication (agent and insured via all three channels – USPS, email, text)
  • Cancellation (1% or less goal)

There is no silver bullet solution to address all the optimization areas. To make advances requires transformative thinking around Underwriting organizational practices, process streamlining and technology platforms. The future of Underwriting is gearing toward making investments in the following areas to achieve the targeted optimizations.

  • Supporting Direct-to-Consumer Distribution with fully automated underwriting (qualification prior to bind)
  • Consistent validation of pricing variables (greater emphasis on renewal business)
  • Individual to Portfolio Underwriting (Proactive Monitoring of Segmented Risks)
  • Model-based Pricing (portfolio risk assessment)
  • Customized / personalized offerings and dynamic pricing
Transformation Approach

The question now is where an organization should start when thinking about an Personal Lines Underwriting transformation. At many insurance carriers, transformative initiatives in other departments have started with the selection of a technology platform as the foundation for their investments. For example, packaged software solutions such as Guidewire, Duck Creek, Majesco, etc., have been the starting point for transformation investments in the areas of Policy Administration, Billing and Claims. As part of these packaged software technology implementations, parallel initiatives have been undertaken to make process and organizational improvements. The combination of technology, process and organizational improvements have resulted in significant changes in the operating models of these other departments, directly making a positive impact on the competitive strategic factors across carriers.

For Underwriting, a similar technology platform based transformative approach should also be taken so that Underwriting can also contribute to an enterprise’s strategic goals and successes. Unfortunately, Personal Lines Underwriting has not received the same attention in the packaged software technology space as other departments.

Some may say that this is because of the commoditized nature of Personal Lines Underwriting and since much of the Underwriting function has been automated via rules engines. Given that, there is very little additional need for technology investment to optimize the Underwriting function. The argument to this commentary is that the marketplace is evolving and remaining with the status quo will leave traditional operating models in the dust. Insurers will need to adapt to the new entrants in the marketplace such as InsurTechs as well as new methods for Underwriting such as personalized offerings.

In order to participate and be a formidable presence in the future insurance landscape, carriers will need to turn to an operating model that allows them to compete. To do so, insurers will need to position themselves for success by focusing on transformative Underwriting change. This will need to start with a technology platform that provides the features and functions needed to enable this transformative change.

Underwriting Technology Platform

As noted, there has not been the same attention to-date given by software companies on developing a packaged solution for Personal Lines Underwriting. When software companies have made investments in Underwriting platforms, the focus has been on Commercial Lines. Companies such as Pega and Intellect SEEC have made investments in developing Underwriting Desktops for the Commercial Lines Space. Given the significantly more complexity of Commercial Lines Underwriting compared to today’s Personal Lines Underwriting, this had made sense in the past.

However, with the need for new and different Underwriting to optimize future competitiveness in the marketplace, the time has come for Personal Lines carriers to consider the need for an Underwriting Desktop. Personal Lines insurers should view an Underwriting Desktop as the foundation for Underwriting transformational change that will also serve as a platform for continued advancements.

Underwriting Desktop Key Features and Functions

One may now say that even though there is a case for a Personal Lines Underwriting Desktop, a packaged software solution is often years in the making. The good news on that front is that most key features and functions needed in a Desktop to optimize Personal Lines Underwriting currently exist in the Commercial Lines versions. There would, of course, be a need to make adjustments and improvements to a Commercial Lines solutions to accommodate the specific needs of a Personal Lines solution, but it would not mean starting from scratch. Given that, a Personal Lines Underwriting Desktop solution can be viewed as a near-term reality rather than a potential longer-term solution that needs to be developed.

An Underwriting Desktop provides a centralized location to perform and manage Underwriting activities. The key features and functions that currently exist for Commercial Lines that would help to optimize Personal Lines Underwriting include:

  • An extensible platform that can be applied across the enterprise including functions that feed into Underwriting (e.g. Sales) and the functions that Underwriting feeds (e.g. Audit).
  • A rules engine that can be easily and dynamically manipulated to meet the strategic direction of the enterprise.
  • A single point of entry for all Underwriting actions to be performed that provides access to all individual risk information, policy documents and 3rd party data.
  • Reporting and analytics that allow for the proactive monitoring of risks both at the insured level as well as the portfolio level
  • Integrated and automated correspondence that provides a view of omni-channel communications with all parties (e.g. agent, insured)

The features and functions of a Personal Lines Underwriting Desktop and its near-term availability provides the Underwriting department with an opportunity to begin to transform in a more immediate timeframe.

Underwriting Desktop Continued Advancements

As with any transformation, there is a commitment needed to lay the foundations for success. The same is true for an Underwriting transformation via an Underwriting Desktop. The reward for undertaking the transformation is that it provides the Underwriting department with an opportunity to optimize its practices while also contributing to success of the enterprise’s overall strategic goals.

However, the successes do not need to stop with the initial transformation. An Underwriting Desktop can serve as a springboard for other future technology successes that will continue to optimize the Underwriting department. Some of the future opportunities that an Underwriting Desktop platform can lay the foundation for include:

  • Integration with Robotics (e.g. RPA) for automating Underwriter administrative tasks.
  • Aggregation of Big Data sources (e.g. IoT) for more data driven predictive analytics.
  • Artificial Intelligence tools to better assess risk based on loss experience.
In Conclusion

All carriers have similar strategic factors that drive transformative investment. Based on the current commoditized nature of Personal Lines Underwriting and the traditional Underwriting operating models, there hasn’t been much recent focus on transforming the Underwriting function. However, with the disruptions in the marketplace, there is a need to renew focus on optimizing Underwriting to achieve an enterprise’s strategic goals. The path to this success is through a Desktop driven Underwriting transformation.

About the Author:

Yusuf Navsariwala is a Director with Exavalu’s Insurance Advisory Practice. He has over 20 years of experience within the Insurance Industry and has served as an advisor to Executives at leading carriers across North America. You can reach him at

Exavalu is your strategic partner on high impact Digital transformation relevant for your Industry. We’re a unique Business Advisory & Technology Consulting firm run by seasoned Industry veterans that are former executives, CIOs, CXOs, and Consulting Principals. We deliver meaningful change and sustained value aligned with your desired business outcomes leveraging our Industry experience and Solutions capability.

This publication contains general information only and Exavalu is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Exavalu shall not be responsible for any loss sustained by any person who relies on this publication.