Our world has been on a journey of inventing, improving and automating many aspects of our lives and work. A significant acceleration of this process happened two centuries ago with the beginning of the industrial revolution. It was then that we discovered how much more can be achieved through creating efficient workflows. Over the last 20 years we’ve been in yet another revolution – this time a digital one. The power of computing and the internet really unlocked what we thought was possible and opened new possibilities to further harness the power of automation.
When it comes to the insurance industry, it was and in many cases still is heavily relying on manual processes. It’s for a good reason, after all, most of the work that Insurers do rely on multi-step workflows using a variety of different data sources that are specific to sectors and lines of business. Over time, the growing need to scale and increase the rate of profitable growth pushes insurers to revisit the most time consuming, inefficient and expensive processes and see where the benefits of automation can be gained.
One of the most important processes is risk processing (spanning new business submissions, mid-term adjustments, renewals or claims), which is riddled with inefficiencies and waste. Let’s dive into where most of those challenges lie:
- Time: underwriters have to deal with many different forms of intake – through portals and mostly via email with presentations from different brokers using their own, non-standardised templates. 90% of the intake is in analogue format, and there’s no distinction between new business, renewals or mid-term adjustments. All this leads to a time-consuming process of sieving through the data to understand what’s what and rekeying information into decision-making systems like CRMs and Underwriting Workbench.
- Talent: underwriting teams are highly skilled professionals, analysing risks and deciding what the business is and isn’t going to write. In a situation where they could spend up to a third of their time on risks that fall outside the appetite, their productivity isn’t very high. Their expertise is wasted on menial tasks rather than making decisions on the risks that are within the appetite. In addition, risks regularly arrive to underwriters who lack the expertise to underwrite them resulting in capacity being spent on the wrong risks and slow turnaround times.
- Data: typically data being used across a workflow is keyed in manually from the broker submission and from manual lookups performed by underwriters (e.g. underwriters looking up data across multiple websites). Data is not centralised and operationalised into multiple steps in the workflow which creates inefficiency and poor data capture. Different data sources are required depending on the product, line of business and geography.
- Control and oversight: through the nature of incoming risks and manual evaluation there is a lack of control of where risks go (for example, which risks are straight-through processed versus sent to an underwriter for review). The vast majority of the data doesn’t get captured and often there is no record of the out of appetite risks. That means insurers find it difficult to analyse the quality of risks they are receiving and refine their appetite and products. The lack of standardised data across the workflow means leadership teams are unable to understand team performance levels and how to improve key metrics.
Because of all of the above, risk processing is a perfect candidate for digitisation and optimisation that results in profitable growth. Now, what an ideal world would look like for this process?
- Digitisation: incoming requests are digitised for quick and efficient processing (no need for rekeying later down the line).
- Combine multiple data sources: multiple data sources are combined to turn risks decision-ready before they reach underwriters. Data sources are integrated centrally and activated in specific steps in the line of business workflows. This enables insurers to use data cost-effectively and scale as multiple data sources are required and are different based on line of business and country. Insurers are also ambivalent about the types of data sources fulfilling data fields from the combination of the customer (submission) data, internal data and external data. They combine and standardise this so that they can make better use of it.
- Digital workflows: insurers easily combine data sources to create digital workflows. Multi-step workflows enable risks of different types to be separated and routed through different paths, for example, low complexity risks may be straight through processed, higher complexity risks can be sent to experienced underwriters to review. Workflows can be reused allowing insurers to standardise how they process risk submissions across different channels.
- Continuous optimisation: rules are continuously refined to better filter risks, prioritise risks and distinguish between risks of different types to optimise decision-making, helping insurers optimise hit rate in target segments and accelerate their target portfolio.
- Productivity: as key workflows like new business processing, renewals, adjustments are fulfilled digitally, underwriter expertise can be applied intelligently – to specific steps in the workflow and types of risks – to maximise decision quality. For example, underwriters receive decision-ready risks in the workbench and make key decisions on coverage, limits and exclusions to maximise decision quality. Because they are not spending time on rekeying data and out of appetite submissions they are able to quote and bind more risks.
- Broker experience: brokers receive quick responses from insurers across multiple channels enabling brokers to be more efficient in serving their clients.
- Data Standardisation: as key workflows are digital and all data sources are integrated into the risk processing workflow, insurers have access to comprehensive, clean and standardised data for analysis and reporting.
Achieving scalable growth quickly becomes the core competitive advantage driving market leadership and share price. At the heart of unlocking scalability is the processing risk in a digital way so that premium growth is decoupled from the expense growth.
We know what’s the desired state to drive efficiency and profitable growth, now it’s time to decide what’s the best way for any insurer to achieve this goal. The two main paths are either turning inwards and building their own platforms or engaging a dedicated partner to fill this gap. In the next two parts of “Achieving digitisation and automation in risk processing”, we will explore those two options in great detail to help insurers make the right choice for themselves and their organisations.
