Optimizing Commercial Lines Underwriting: How Technology Can Improve Efficiency and Accuracy
The U.S. Excess and Surplus (E&S) market is booming. Direct premiums written during the first six months of 2022 increased by nearly 28 percent and they now constitute nearly 9 percent of the country’s total property and casualty industry, according to an analysis by S&P Global Market Intelligence. In this blog post on Optimizing Commercial Lines Underwriting, we’ll explore how insurers can benefit from new technology that will enable them to capitalize on this booming market opportunity.
Surplus line carriers tend to cover complex or high-risk businesses that are unable to find insurance within the traditional or admitted market. The regulatory model tends not to be as strict as the framework for admitted carriers, which affords E&S businesses greater flexibility in setting premium rates and terms for policies. Underwriters evaluate each application based on factors that include the type and age of the business, the company’s financials – sales, assets, profits – financial history, including previous bankruptcies and prior insurance claims, security and loss prevention practices and more. Failing to price risk well can have dramatic financial repercussions for insurers if the business experiences a catastrophic loss and there’s a large payout.
The use of advances in technology can help underwriters support E&S programs and give them confidence to underwrite these more complex risks. Underwriters need a 360-degree view of all relevant data to make informed decisions. They also need to orchestrate multiple streams of siloed tasks across different stakeholders to finalize quotes more rapidly.
Applied artificial intelligence (AI), machine learning, distributed data collection and automation can enable insurers to not only more accurately underwrite a wide variety of risks using real-time data from various sources and improve decision-making, but also helps underwriters become more efficient. Digital technologies can help get decisions and quotes to businesses faster, improving customer experience and boosting sale rates and can help carriers more easily comply with data-protection regulations.
Not all technologies are equal, however. Key features of an optimized E&S lines underwriting solution should include:
- The ability to integrate with third-party data sources
- Customizable risk assessment models
- Automated decision-making and workflows
- Real-time data analysis and reporting
- User-friendly interface for underwriters and other stakeholders
When evaluating E&S lines underwriting solutions to determine the best fit for their needs, carriers must first consider how each solution’s capabilities align with the organization’s strategy and goals. Performing a cost-benefit analysis is essential. In addition, consider a provider’s proposed implementation timeline and the resources it will bring to the project. Inquire about the company’s data privacy and security provisions to ensure you will remain compliant with regulations. And finally, review the provider’s change management and user adoption record, and discuss case studies of the provider’s successful implementations with carriers that have a similar profile.
Carriers that write E&S business know that their organizations depend on an optimized underwriting function. It’s imperative that they invest in technologies that can help automate the underwriting process, speed time-to-quote and speed and simplify the renewal process while enhancing customer and agent experience.