Underwriting Modernization: Why a Holistic Approach is a Realistic Approach

By Sreedhar Alavalapati, Senior Architect, X by 2

Toronto, ON (June 6, 2016) – One of the more persistent trends over the past several years in the insurance industry has been the focus on core systems modernization. It’s certainly understandable, given the kinds of antiquated systems most insurers have had to keep alive, and their desire to introduce better systems and platforms. Many vendors have introduced greatly improved insurance core system solutions over the past few years, and that has given insurers better alternatives and choices.

However, in the race to a more competitive market presence, many insurers have focused solely on the form and function of these modern systems, believing that just implementing them will position them well for the disruption that is already occurring in the industry. That is a myopic view that ignores the fact that many carriers have more systemic issues than a modern core systems platform alone will not be able to solve.

So while it’s true that core system solution providers have been making great strides in building the core transaction processing capabilities within their policy administration systems, including complex out-of-sequence endorsements, etc., there are still unfulfilled needs for carriers. Chief among these requirements is something that core systems can support, but can’t solve, and that’s the ease-of-doing-business issues for carriers and their agents. Many of the recent industry surveys of the agencies indicate the importance of the carriers’ capabilities beyond the support for core transactions, like effective underwriting processes and responsive service.(1,2)

Other top line issues for carriers include, but are not limited to:

  • Customer centricity as a way to move away from traditional policy-centric approach;
  • Real-time collaboration between agents and front line underwriters;
  • Work Management and all it entails, including an underwriter workbench to manage relationships and tasks.

These are just to name a few. That is why it’s critically important for carriers to take a more holistic approach to modernization.

Carriers must broaden their thinking and scope to address the many parallel needs from which the future of the carrier will be built. So while it’s prudent to modernize the operational and transactional platforms, carriers should always keep their eyes on the proverbial ball when it comes to the core future capabilities of the carrier. The way to do that is to make the future core capabilities of the carrier (as opposed to the future core systems of the carrier) part and parcel of any assessment of core systems modernization efforts.

The way to accomplish this is to work backward from the traditional way of vetting needs and requirements for modern core systems. When vetting core systems, many carriers make the mistake of focusing on specific functionality and transactions, such as out-of-sequence endorsements or narrow workflows. While these are important items, they are generally not the kinds of things that inspire agent and customer loyalty across markets and distribution channels.

That’s why carriers should reverse engineer this vetting processing by identifying the three or four strategic capabilities that must be done well to ensure the long-term success of the carrier.

Those top strategic capabilities might differ from carrier to carrier depending on their business objectives, but at least some of the following should apply to most carriers:

  • Distribution channel optimization;
  • Frontline-underwriting processes combined with back office supporting processes;
  • Ease of doing business – agent, customer, and carrier perspectives;
  • Customer centricity;
  • Higher levels of straight through processing;
  • Greater support for collaboration features between agents and underwriters;
  • Efficient data entry mechanisms for actionable analytics;
  • Enable agents to effectively cross-sell and up-sell products.

The key is to focus on the strategic capabilities first, and then turn the company’s attention to the tools and techniques – including core systems – needed to achieve the desired strategic capabilities.

For example, among the key carrier technologies that are essential to underwriting modernization, are those that enable a consistent and responsive underwriting process that is integrated with real-time collaboration tools. This kind of technology and process capability goes right to the heart of the desired strategic capability of effectively and proactively managing distribution channels.

Another example of marrying a strategic underwriting capability to a technological underpinning is when carriers provide modern web applications with self-service transactions to achieve straight through processing and couples that with very knowledgeable frontline underwriters who can collaborate with agents to effectively serve their demanding customers.

As macro trends such as consumerization and digitalization continue to reshape the industry, a real-time assistance process for agents that supports their evolving business sales processes – including up-to-date status on all their requests and opportunities – is paramount in today’s fast paced, instant gratification sales cycle. Enabling a 360-degree customer view with all their current and potential product and lifestyle relationships and interactions is critical for sound underwriting, as well as identifying cross and up sell opportunities.

Even the best of the core policy administration systems have many gaps when considering such a broad and holistic perspective of end-to-end processes. That’s why taking a holistic, and therefore strategic, approach to underwriting modernization that foresees end-to-end underwriting processes that close many of the existing gaps is essential to achieving greater efficiencies within the carrier-agent relationship continuum.


1. PropertyCasualty360.com biennial producer survey: “Top carriers revealed: NU 2014 Agent & Broker Survey results” (Sept. 9, 2014).

2. InsuranceJournal.com carrier relationship study: “Independent Agents Seek New, Strong Performing Carriers: Survey” (Apr. 14, 2016).

About the Author

Sreedhar Alavalapati is a Senior Architect at X by 2, a technology consultancy focused on the practice of architecture in the insurance and healthcare industries. Alavalapati has decades of experience advising clients on their technology strategies and lead the design and implementation of enterprise class initiatives.

About X by 2

Established in 1998 and based in Metro Detroit Michigan, X by 2 is a technology consultancy focused on the practice of architecture in the insurance and healthcare industries. Whether P&C, Life, or Health, X by 2 knows the insurance business and has proven experience planning and delivering core insurance systems, business applications, and enterprise integrations. For more information, visit xby2.com.

Source: X by 2