Digitise workflows to align underwriting strategy with frontline execution

By Juan de Castro, CCO / COO, Cytora

Today’s hardening market has exacerbated the need for commercial insurers to streamline underwriting operations and remain competitive. And while we’ve seen the digitisation of workflows in some areas, time spent on manual tasks by frontline underwriters is still estimated between 30-40%. 

In an upcoming webinar with Intelligent Insurer, we’ll be discussing how insurers can achieve an end-state where 100% of underwriting capacity is spent on decision-ready risks, that are winnable and in appetite. Not only that, but how such an end-state will enable underwriters to deliver better service to brokers, with average follow-up time dropping to under two hours from submission reception. 

You can register for the webinar here, taking place at 3pm BST on 27th May.

In the meantime, we hear from Cytora COO / CCO Juan de Castro on how to tackle the gap between underwriting strategy and frontline execution, and how to accelerate growth by ensuring underwriters solely focus on risks that are aligned to strategy, in-appetite, and are winnable. 

Q: Why has it been such a challenge for underwriting teams to digitise workflows in commercial insurance? 

Juan de Castro: Until now, the input into the underwriting workflow has been a non-digitised risk – often quite simply an unstructured document attached to an email. It’s very difficult for insurers to digitise a workflow on the back of that. Secondly, to be able to automate a decision in the workflow, such as what’s in appetite and what isn’t, you usually need more information than what’s provided in the submission, such as CCJs or flood data. 

Q: How has the hardening market exacerbated the need to streamline underwriting operations?

JdC: With today’s hard market, insurers are flooded with a higher volume of submissions, so identifying those that are in appetite is more time consuming. With current operating models, an underwriter needs to manually open every submission and make a decision on whether to underwrite the risk or not. What’s more, following Covid-19, insurers are evolving their underwriting appetite to respond to market conditions. These changes require underwriters to be educated on new appetite rules, which today relies on human cascade and training. 

Q: Can you explain why there’s often misalignment between underwriting strategy and frontline execution? 

JdC: Today, underwriting decisions are often based on an underwriters’ judgement. This relies on all underwriters understanding and executing in line with the underwriting strategy, which is a big challenge in itself. Again, once you make any change to the appetite, it takes time to train each underwriter, meaning you can’t be agile and respond to changing market conditions quickly. 

Secondly, there can be grey areas when it comes to appetite – it’s never black and white. Unless you prioritise what underwriters are working on, they’ll spend a similar amount of time across all submissions, regardless of how well they fit the underwriting strategy. But if you prioritise those submissions within the appetite “sweet spot”, it drives a higher rate of conversion for those risks that enhance the portfolio. This means you end up with a book much better aligned with your underwriting strategy. 

Q: How can underwriting leaders quickly and effectively steer the portfolio to capitalise on changes in the market? 

JdC: To effectively identify changes in the market, you need access to good management information. For example, if you’re seeing a higher volume of submissions from a certain type of business that previously sat outside appetite. Then the question is how you make this algorithmic, rather than rely on changing or up-skilling all underwriters. 

You need the technology in place to make those decisions for you, to assess the fit of each submission against underwriting appetite, and to either filter them out or prioritise them accordingly. This means underwriters spend time solely on in-appetite, winnable risks – even when the appetite has changed. 

Q: How does this model enable underwriters to deliver a superior broker service?

JdC: Firstly, this model minimises the time underwriters spend on non-attractive risks, so they can get to highly attractive ones much faster. And by the time a submission reaches an underwriter, the risk is already enriched with internal and external data. This means underwriters can get back to brokers faster and have more meaningful conversations, as they have all the information they need about the attractiveness of the risk. And with more data about the risk, you can understand it better and offer that customer a product that’s a better fit to their needs. 

Q: What does the future look like for underwriting workflows?  

JdC: Put simply, we’ll see 100% of underwriting capacity spent on decision-ready and portfolio-enhancing, winnable risks. And there’ll be no admin activities for underwriters. Instead, all of their efforts will be spent on effective underwriting and building strong broker relationships. 

Sign up for the webinar here, or get in touch with us directly here for more information.