Strategy Meets Action (SMA), a research and consultancy firm serving the insurance industry, has released a new report concerning underwriting practices in the industry. The report, “Underwriting Automation: Insurer Plans and Trends,” notes that insurance companies are making a move to completely automate their underwriting process. The report draws upon data collected by SMA from 144 insurance professionals throughout the industry. This trend may be a result of insurers being unable to meet underwriting goals due to flaws in their systems.
Of those participating in the survey, 21% claimed that their businesses were spending 15% of their IT budget on building an automated underwriting process. The report indicates that 50% of insurance companies cannot meet their underwriting goals because of faulty or inefficient underwriting systems. These shortfalls can potentially mean big financial losses for insurers and could have them become targets of insurance regulators.
The report notes that automating underwriting is a largely misunderstood issue. There is great concern that automating the process would remove the need of human underwriters. The report suggests that this is not the case, as most insurance companies are investing in systems that provide more support for their underwriters. These systems are designed to bolster discipline, consistency and predictive modeling. They are also built to help underwriters work together more closely. Concerns remain over how the automation process will affect the insurance industry.
To help shed more insight on the issue, FirstBest Systems, a designer of software for the global insurance industry, will be hosting an online seminar on March 29, 2012. The seminar will feature the authors of the SMA report, who will attempt to provide perspective on the issue and detail the finer points of the report.
