The art and the science of underwriting – is the science letting you down?

Published on: 31st March 2021

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As a CUO you are always looking for an edge. Is it time to rethink the science?

With loss ratios generating more variability than expense, it’s no surprise there is a laser-like focus on how this impacts operating results. Recent research from McKinsey & Company1 confirms what has been true for decades: there is significant variability among top commercial insurance companies. Cue: the focus on underwriting performance. Reinventing the role of underwriting to become insight-driven to create an edge, has never been more important, but where does a CUO start?

Underwriting excellence is both an art and a science. Some may argue it’s more one than the other, but like all good things, it really comes down to the balance. And it’s hard to find that balance when the pressure is on. In today’s competitive market, underwriters have to solve complex problems and make better decisions faster with real-time insight. It is a highly sophisticated process that relies not only on deep and extensive first-hand experience but also on mining and interrogating multiple, disparate data sources. Given that today’s top commercial and specialty CUO’s are masters in their craft, is it the science that’s letting them down?

Data, data everywhere

Insights rely on data, and we’ve got a lot of it! The volume of data is simply staggering. But bigger doesn’t necessarily mean better. While the industry is awash in data, getting the right mix of available data to accurately assess and price the risk is a challenge. For underwriters to differentiate and act promptly they need to be on the front foot, but many still struggle with:

  • Siloed and inaccessible data – new and existing data sets are fragmented and reside in different places.
  • No single customer view – tasks at individual, team and risk level aren’t consolidated.
  • Slow, manual workflows – underwriters continue to sink time into non-value-add inefficient tasks.
  • Multiple data formats – submissions are made in a myriad of formats: structured and unstructured, internal sources and third-party portals.
Data harmony: the first step to underwriting success

The good news is that advancements in ‘the science’ mean you can overcome all these barriers. While there isn’t a ‘one size fits all’ formula for success, insurers can ease the burden on underwriters and address these challenges with AI-enabled commercial underwriting software solutions. And the even better news is these tools are within reach: enter the Underwriting Workbench (the digital equivalent of a real workbench – one place where tools, data and work align).

Digital commercial insurers are growing twice as fast as non-digital competitors, and it’s not hard to see why forward-looking underwriters have embraced automated underwriting workbenches:

  • With a focus on data optimisation, a modern workbench fuses advanced automation technologies with leading data providers. This means the platform distils, harmonises and organises huge amounts of structured and unstructured data, from any source, even legacy systems.
  • In real-time, the AI-powered platform turns complex data from across the business into a single customer view, meaning underwriters can lead with forward visibility and commercial confidence.
  • Advanced intelligence and data processing toolsets automate the receipt and upload of risk and asset schedules and bordereau, saving time and improving accuracy.
  • Customer information is keyed once, providing a single-entry point for data entry, data cleansing and data enrichment.

But the goodness doesn’t stop there. The commercial underwriting software platform enables better workflow, better collaboration and enforces compliance, freeing up underwriters to focus on core work. According to KPMG2 automated underwriting workbenches improve the application process flow leading to better decision making and ultimately higher profits.

Underwriters today need to lower the costs of underwriting, improve the quality of decisions and boost the earning potential of every underwriter. This starts with prioritising insight-driven underwriting. But obtaining the essential data is one thing, joining it up to find meaningful insight is another. Having a great reputation for underwriting capabilities for commercial insurers will come down to excelling at both: the science and the art of underwriting.

If you’d like to make better decisions, faster with real-time insight, get in touch to find out how we’re helping customers around the world transform their underwriting performance.

Author info: Ben Huckel – CEO and co-founder at Send. To get in touch with Ben and find out more about Send, you can find him on LinkedIn.

Reference:

1 The future of underwriting in commercial P&C insurance | McKinsey

2 Enabling the future of underwriting – KPMG

Image credit: Michael Dziedvic

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