National Underwriter - April 16, 2012

SMA: Commercial Insurers Need to
Embrace Automated Underwriting

“there is a huge gap between
underwriting effectiveness and consistency,”
she says. “the way you get consistency is
through automated rules and workflows,
bringing in some predictive models, and
scoring.”
Smallwood believes underwriting roles
have changed over the years, yet some
underwriters may be in the peak of their
career and unwilling to change.

“there needs to be
more education to explain
that automation is not
necessarily elimination, but
that it’s needed to improve
the overall underwriting
process,” she explains.
“the roles of underwriters
do change, though. they
become more portfolio
managers and relationship
people. unfortunately, in
some cases, that’s not their
strength.”
Smallwood contends no
insurer is ever quite finished
with automation.

“i think it’s encouraging that automation continues to grow,” she says. “When you talk to mid-tier insurers—which is the majority in the insurance market—they rarely have specialty or large national accounts. they don’t segment in their minds between the small and middle market.

“if you talk to $500-million companies with personal and commercial lines, they are still trying to sort through the levels of automation,” she says. “they haven’t segmented the insurance the way large carriers have. the technology has finally caught up; now we need the insurers to catch up.” NU

21%
22%
26%
52%
42%

Have mastered it or almost there

37%

In progress or just
getting started
Struggling or
no plans

Source: SMA Research

BY ROBERT REGIS HYLE

AutOMatiOn iMplieS labor-saving steps, which is usually followed by layoffs. So it should come as no surprise that some underwriters don’t look kindly on automat-ed-underwriting solutions, since they foster the perception that the underwriter’s role is shrinking.

But at least one industry analyst looks at underwriting automation for commercial lines as a way to augment the talents of underwriters and provide them more information to improve the decision process.

“part of the problem is education,” says Deb Smallwood, founder of research-and-advisory firm Strategy Meets action (SMa).

“We as an industry need to get better
access to external data and predictive-
analytics tools for commercial lines. the
maturity of the data and the analytics are
coming along, but they still aren’t where
personal auto is.”
Many underwriters believe they can
do their jobs better without the help of
automated solutions, Smallwood says.
“When you start to get into the commercial
markets, [underwriters] consider it an art-
versus-science issue. But if you look at small
and midsize commercial risks, there are lots
of opportunities for automation. there’s
been a minimal impact [on underwriters]
in terms of automation.”

LEVEL OF UNDERWRITING AUTOMATION BY LINE
personal Lines commercial Lines—small Markets

happen between agents and underwriters, according to Smallwood.

“When information is submitted, it needs to be complete and meet the risk-appetite profile of the carrier,” she says. “there is a lot of back-and-forth going on between the two sides that is inefficient.”

in SMa’s recent report (“underwriting automation: insurer plans and trends”), Smallwood discovered ease of doing business for agents and brokers was rated the most important factor for insurers to simplify the submission process—but more is expected of insurers, particularly within the areas of efficiency and effectiveness.

Accurence Aligns with First Choice to Improve Settlement Software

Accurence inc., a provider of on-site- inspection and automated-scoping software for property-insurance claims
adjusters, has announced a long-term strategic
alliance with First choice repair.
the technology partnership provides
implementation of settleassist nationwide within
the First choice repair network. settleassist is
a software-based rules-engine solution utilizing

digital and mobile devices for wind- and hail-
claims settlement that helps adjusters focus on
damages and on the customer.
First choice repair is a managed-repair
program for carriers comprising a network of
certified local, regional and national roofing
contractors who ensure that homeowners get
wind- or hail-related roof, siding and gutter
damage repaired. each First choice repair
member will have full access to settleassist
when providing onsite inspections of
damaged homes.