In the automated underwriting market for life insurance, reinsurers lead the way in developing decision logic, but big IT vendors may be fast followers if interest in straight-through processing continues to grow.
Boston, MA, March 30, 2010 – A new report from Aite Group, LLC provides an overview of automated underwriting platforms available in worldwide life insurance markets. Based on roughly 25 Aite Group conversations with solutions providers and their clients as well as other industry participants, the report also provides insight into the trends driving the adoption of automated underwriting platforms.
Automated underwriting is the life insurance equivalent of straight-through processing: automated final decisions on insurance applications without intervention by a live underwriter. The solutions, which have been evolving since the 1990s and have been used widely in the United Kingdom, South Africa, and Australia, are gathering momentum in the United States as new data-driven methodologies have emerged and insurers have begun to sell insurance to the middle class, a group that has been underserved by insurers focused on selling to high-net-worth individuals. Automated underwriting is also part and parcel of insurers’ strategy to expand footprints in emerging markets, particularly India and China, where huge volumes of low-face-amount policies are sold. Today, a range of such solutions is available in the worldwide marketplace. They base decisions on responses to questions posed to applicants or in combination with data obtained from third-party vendors.
“Life insurers are finding that automated underwriting solutions can provide many benefits, including a reduction in underwriting time and costs, and a means to reach new markets efficiently,” says Clark Troy, senior analyst with Aite Group and author of this report. “Reinsurers offer focused solutions, while IT vendors offer integrated ones with lower enterprise total cost-of-ownership benefits to clients. Though reinsurers have a slight lead on decision logic, big IT vendors may be fast followers if interest in straight-through processing continues to grow.”
The report profiles solutions provided by 11 reinsurers and IT vendors, including Accenture, Allfinanz, CSC, General Re Corporation, Hannover Reinsurance, MajescoMastek, PlanetSoft, RGA Reinsurance, StoneRiver, Swiss Reinsurance Company Ltd., and Transamerica Reinsurance.
About Aite Group
Aite Group is a leading independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry. It was founded by leading industry experts in Banking and Securities & Investments. Aite Group brings together a team of business strategy, technology and regulatory experts to deliver comprehensive, timely, and actionable advice to financial institutions and technology vendors. www.aitegroup.com