3 Things to Look for in an Automated Underwriting System

Shyam Somani, Insurance Solutions Leader
January 26, 2023

The underwriting process is notoriously inefficient. Today, underwriters typically spend 40% of their time on non-core activities such as gathering and entering data for submissions and renewals, issuing policies, and administrative tasks. The result of such manual underwriting is lost productivity and higher costs, with an expected price tag for insurers of $85–$160 billion in lost business over the next five years.

Automated Underwriting System

In the current economic climate, efficiency is more important than ever. Inflation is driving loss costs higher and faster in most markets, undermining underwriting profitability. Also adversely affecting profitability are suboptimal decisions made due to lack of a 360-degree view of the customer and their risk.

A recent report by the Insurance Information Institute found that 2022 P&C underwriting results are expected to be the worst since 2011. They found that “the industry’s combined ratio—a measure of underwriting profitability in which a number below 100 represents a profit and one above 100 represents a loss—is forecast to be 105.6, a worsening of 6.1 points from 99.5 in 2021. Loss pressures and a hard market are expected to continue due to inflation, supply chain disruptions, and geopolitical risk.” To remain competitive, insurers must improve speed to quote and underwriting efficiency, even as underwriting resources are stretched.

To remain competitive, insurers must improve speed to quote and underwriting efficiency, even as underwriting resources are stretched.

With the cost of acquiring new customers nine times higher than retaining existing ones, it's vital to elevate the customer experience to set yourself apart—especially during the current economic downturn when customers are increasingly shopping around for policies. Making it easier for the customer to engage with you through multiple communication channels and speeding up the time to quote can help increase customer satisfaction and retention.

The need for better automated underwriting systems.

While automated processes cannot replace the actual underwriter, intelligent automation including AI can replace manual, labor-intensive tasks, freeing up the underwriter to focus on high-impact tasks that require analytical skills or cognitive reasoning.

Automation needs to be carried out intelligently to provide meaningful improvements to the underwriting process. Below we discuss three important requirements for a modern underwriting system.

Watch the video to see the benefits you'll achieve using Appian's Connected Underwriting solution.

Top requirements for a modern underwriting system.

1. Unify your data with a data fabric.

On a typical day, underwriters spend hours combing through emails from brokers, downloading attached PDFs and spreadsheets, and copying and pasting the data they think is relevant. To assess risk, the underwriter has to jump to multiple documents, each formatted in a different way. They also need to pull data stored in internal existing systems such as policy admin systems, CRMs, agency management systems, closed book, lead management systems, and so on.

With data stored in so many different places, underwriters spend a tremendous amount of time and effort looking for the data they need, merging it together, and pulling it together to assess risk and make underwriting decisions. As a result, they are missing target processing speed by days, inhibiting their ability to write new business.

In many cases, they are forced to rush decisions with only a fraction of data in hand. This leads to clear problems such as incorrectly assessing risk based on the insured’s risk appetite. And inevitably they’ll miss key risk factors that could end up costing the insurer millions of dollars in claims.

A good underwriting system needs to make the data from all sources easily accessible in one place, such as a data fabric. A data fabric eliminates data silos and the need to manually pore through files attached to emails. Insurers need a way to expedite the main elements of the underwriting processes, including data ingestion, clearance, triage, and data enrichment. And they need to glean the relevant insights from the data gathered. The combining of humans and machines can more intelligently and efficiently guide data-driven decisions.

2. Deploy underwriting automation rapidly without having to write code.

A modern underwriting system should use the following underwriting automation tools to eliminate redundant, manual data entry and accelerate speed to quote:

  • Robotic process automation (RPA): Software bots that perform repetitive, rules-based operations that require no decision making or strategizing. RPA can save underwriters time by collecting data from internal and external sources and populating fields with the relevant information.
  • Intelligent document processing (IDP): Automatically extracts and classifies information from standard and non-standard underwriting documents (including loss runs, ACORD forms, and more) sent by email, eliminating manual effort and human error, and saving valuable time.
  • Artificial intelligence (AI) and machine learning (ML): These can provide valuable insights such as identifying conversion opportunities, improving risk selection and tiering, and allowing for more granular pricing by coverage level, market segment, industry, and geography.
  • Automated workflows: By bringing together data and integrating systems, automated workflows improve connectivity with a unified claims, underwriting, and agent-customer experience, accelerating the underwriting process.
  • Omni-channel distribution: Insurers can distinguish themselves by being easier to work with for their distribution partners. In addition to using email, insurers should drive business through portals, eBrokers, partners, apps, and chats.

Using a low-code platform with a drag-and-drop interface, you can rapidly construct agile workflows that pull in RPA, IDP, and ML/AI processes at the right time and interface with your existing legacy and core systems when needed.

3. Remain agile and adapt fast.

The insurance landscape is shifting rapidly due to changes in product, distribution channels, and data sources. There is a massive amount of new information available to underwriters, who need to evaluate, select, and integrate new data sources quickly.

Insurers need an underwriting system that can quickly scale to handle increased business volume. It should be flexible enough to accommodate new workflows and advanced data sources as they become available, while still connecting to your existing systems. That’s the only way the underwriting system will be part of the solution and not another bottleneck.

Accelerate the underwriting process.

Appian Connected Underwriting is a new prebuilt solution by Appian that automates the core elements of the underwriting process: data ingestion, clearance, triage, and data enrichment. It empowers insurers to accelerate the underwriting process. It improves the customer experience by reducing time to quote and rapidly integrating disparate data sources to create a single 360-degree view.

Appian Connected Underwriting includes built-in IDP for data ingestion and can also connect to existing IDP providers. The solution integrates with process mining and RPA to improve operational efficiency, triage and prioritization. Connected Underwriting is highly scalable and configurable. It seamlessly connects with any systems and data sources, eliminating the need to rip and replace. The Connected Underwriting solution utilizes the best of the Appian platform to help underwriters focus on core activities, rather than repetitive tasks. You’ll increase your business and IT collaboration by leveraging visual development and reusable components to build and modify robust apps quickly.

Using Appian Connected Underwriting, you will:

  • Improve your quote-to-bind ratio. Increase frictionless processing by unlocking a single, 360-degree view to reduce underwriters’ turnaround times.
  • Increase submission clearance efficiency by as much as 40%. Eliminate manual data entry and improve efficiency using underwriting automation tools like RPA, IDP, and AI.
  • Deliver a superior customer experience. Simplify customer journeys and reduce quote-to-bind times to win and retain more customers.

Appian’s data fabric provides an agile enterprise layer that connects to existing data sources and systems, creating a unified view of enterprise data. There is no need to move data from where it currently resides or to rip and replace your existing systems. Connected Underwriting even integrates with existing policy admin systems like Guidewire to empower insurers to create a modern underwriting experience.

Read the whitepaper, Unlock the Power of Connected Underwriting, to learn how to use technology to optimize your underwriting workflows, to balance speed and accuracy while minimizing risk.