46%

Reduce time required for underwriter to make decision

27%

Fully automate, reach underwriting decision without an underwriter

23%

Recommend underwriting decisions to underwriters

3%

barriers tO underwriting autOmatiOn

IT platform Internal resistance Policy admin systems High investment No budget available Robustness of solutions AMS limitations

18%

he points out. Petersmark says these new expecta-
tions include the ability to access everything they
need online, including research and cost compari-
sons—when buying securities and managing their
financial portfolio. “These emerging market realities
all have implications for the underwriting process
at most carriers, many of whom have been slow to
embrace updated best practices for underwriting
driven by the sorts of automation and efficiencies
that at once enable modified business processes, and
threaten entrenched underwriting practices.”
Quick turnaround time also helps brokers and
agents with their customer engagements as well.
That’s one of the primary advantages cited by
ICBC’s Irwin. “Most policies can be issued by our
brokers on the spot, and have binding authority
for 98% of the business,” she says. “We have a lot
of strong quality control and monitoring with our
brokers. So we have the right governance structure
in place, and customers walk into a broker’s office
and walk out with a policy.”
Delivering enhanced underwriting capabili-
ties will not occur overnight. First and foremost,
bringing agents into an online world is a major
part of the challenge, akin to herding cats, indus-
try experts agree. “The challenge is the workflow
from agents and brokers, since many use old
agency management systems or do not use agency
management systems for quotes or to capture large
complex applications. On the flip side, insurers are
pushing out their solutions to agents and brokers.

The entire connectivity between agents/brokers
and insurers has become complex, cumbersome
and challenging—with no clear solution in sight. For
some of these lines of business, it is just easier for
agents/brokers to enter data into an ACORD app
PDF and e-mail it.”
Amerisafe has been addressing issues with agents
through a common agent portal, called GEAUX
(pronounced “go”), built on FirstBest UMS technology
from FirstBest Systems Inc. “We have an independent
agent channel, and there’s a reason they’re called inde-
pendent,” says Banta. “They have minds of their own,
and every agency is different, and they won’t change
if they can’t see if it’s to their benefit. Who can blame
them?” The challenge was selling these agencies on
adopting the portal-based application system, which
started out at a disappointing 25% utilization rate. “It
was very slow going at first to get that ratio up,” he
relates. “There were some agencies that embraced it
right away and wanted everyone in their office who
could submit an application to use it. And there were
agencies who said ‘no way, we’re not ready for this, it
sounds complicated, it sounds like a tough integration
process, deal with applications the way we’ve always
sent them to you.’ And all variations in between.”
The portal’s utilization rate “is now headed
toward 60%,” Banta adds. “The ones who use it
love it, and we probably couldn’t tear it away from
them. But some agencies are just not structured to
take full advantage of the tool.”
Along with internal resistance, existing technol-

51%
50%
42%
38%
28%
26%

Source: SMA survey of 146 insurers, 2011

ogy platforms pose obstacles to effective underwrit-
ing automation deployments, the SMA survey finds.
Many insurers blame the existing legacy generation
of policy management systems, Smallwood says.
“The policy admin systems, the ones with a mod-
ern architecture, have workflows, rules engines,
can plug in analytics and can automate the quote
transaction via STP for standard personal lines and
simple, small commercial risks,” she says. “Very
few system can automate the entire underwriting
process. Insurers beginning to shift IT spending be-
yond STP for simple risks and focus on automating
more complex lines of business. This is becoming
a hot area and insurers are starting to understand
what is possible.”
Genworth’s Chartrand agrees, observing that
the input of a human underwriter may always be
required to deliver the best decisions. “We really
want to take a look at policyholders’ health and
lifestyles, and do that balance. When you get down
to something like putting it in a computer program,
you get ‘yes’ or ‘no’ answers, and it makes you
more conservative. And you will decline more, and
you will probably get higher ratings more often.”
Ultimately, the ability to effectively balance au-
tomation against the need for human input is criti-
cal, as Nationwide’s Korcykoski points out. “Under-
writing excellence—your capability to evaluate risk,
place that risk in appropriate coverages and pricing
levels is proven to be a key indicator to a carrier’s
long-term health and success.”