New York, NY (Nov. 11, 2013) – Technology investment is seen as the best way to improve the quality of underwriting in commercial insurance, but lack of data integration and technology training are limiting underwriting productivity and efficiencies, according to findings of an Accenture survey of 559 commercial insurance underwriters in the United States.
The survey indicates that an overwhelming majority of underwriters (93 percent) perceive investment in technology as the best way to improve underwriting quality, and two-thirds of respondents said technology has significantly improved underwriting performance.
However, more than half of respondents (54 percent) said technology also has increased their workload – mainly due to lack of data integration across their company (cited by 81 percent of that group). Lack of process integration (67 percent) and insufficient training (57 percent) were the other major reasons for increased workload cited by respondents.
“There is no question that technology has brought a step change in the quality of insurance underwriting in recent years,” said John Mulhall, a managing director in Accenture Property and Casualty Insurance Services and the management consulting lead for insurance policy services offering in North America. “But the full benefits of technology investments in terms of productivity and efficiency cannot be achieved without broader data and process integration across the organization.
“The right questions should be asked and answered before selecting and implementing any new technology, such as ‘What should these technologies be able to do? How do they enable underwriters to focus on value-added activities and complex cases? What training is needed to maximize user adoption?'”
When asked what measures they will invest in over the next three years to improve underwriting effectiveness, respondents cited process automation (57 percent), predictive analytics for risk evaluation and pricing (51 percent) and external data to evaluate risk (51 percent).
“Underwriters typically face a number of challenges in evaluating risk,” said Michael Reilly, a managing director in Accenture Property and Casualty Insurance Services. “These include difficulties in obtaining historical, market and claim information while pricing the risk, disconnected account information, and long and unnecessarily complex communication channels. Underwriters must often re-enter data to and from multiple systems and must rely on an employee base that is subject to turnover – and also with many of the most experienced underwriters nearing retirement. Automated underwriting systems offer the promise of better information and greater efficiency through the reduction of re-working and errors.”
Among other key findings of the survey:
- More stringent regulations are seen by underwriters as having the most significant impact on their function in the next three years, cited by nearly three out of four respondents (73 percent).
- Maintaining underwriting and pricing discipline is the top challenge for underwriters to achieve their business objectives, mentioned by nearly three out of four respondents (72 percent).
- More than half (58 percent) of respondents say speed to market is the most important goal driving investments in underwriting capabilities. However, more than seven out of 10 respondents (72 percent) indicate that it takes their organization six months or more to launch a major new product.
- More than three-quarters (77 percent) of underwriters say their organizations have already implemented, or are implementing, or are planning to implement mobile technologies for customers and for agents.
“The market is showing signs of slowing down and is likely to soften over the next couple of years, based on historical patterns,” says John Mulhall. “Softening rates and rising expense ratios will expose inefficiencies hidden in a more favorable market. Carriers have an opportunity to make investments to address underwriting discipline now, before a soft market cycle fully emerges. Carriers that invest effectively in data, tools and technology to improve underwriting accuracy and efficiency rather than just adding another tool to the process, while managing their strategy through market cycles will separate themselves from those unable to keep up.”
Accenture conducted a quantitative online survey of 559 insurance underwriters in the United States in June 2013. Respondents included senior underwriters, department or product managers, and other underwriting executives. The primary areas of focus were commercial lines (68 percent), specialty lines (23 percent) and reinsurance (9 percent). Among firms surveyed, 26 percent had net premiums written greater than $1 billion; 29 percent had net premiums written between $500 million and $1 billion; 24 percent had net premiums written between $100 million and $500 million; and 21 percent had net premiums written below $100 million.
Accenture (NYSE: ACN) is a global management consulting, technology services and outsourcing company, with approximately 275,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page is www.accenture.com.
Accenture Property and Casualty Insurance Services is a business service within Accenture’s Financial Services operating group that provides management consulting, technology and outsourcing services to property and casualty insurers. Its services are designed to help insurers achieve profitable growth though product innovation, enhanced customer interactions and reduced operating costs.