Underwriting has historically been one of the most data-intensive areas of insurance. But when it comes to looking at investments and results, data and information handling for underwriting at most carriers is still disjointed and disconnected. This is underwriting’s version of the digital divide we’ve been discussing in this series, and it leads to inefficiencies and ineffective underwriting.
The divide exists because today’s underwriting platforms have not evolved to meet the needs of a modern digital carrier. To see why, let’s take a quick look at the history of these platforms.
The first generation of underwriting platforms was built to provide rating systems and core policy management needed to price and administer the underwriting of policies. The technology they run on has changed from mainframe to servers to the cloud, but the platforms themselves remain focused on managing the least information necessary to price and maintain the policy.
The second generation of underwriting systems was made to complement these core rating and policy systems with workflow solutions. Most policy systems in use today are in this second generation. They can manage the flow of documents and select information along the process as carriers rate, quote, and issue policies.
These two generations of underwriting solutions are foundational to modern underwriting. But they don’t address the full needs of modern underwriting, which creates a growing digital gap.
The risk analysis that underwriting does relies not just on the rating and policy data in the workflow system, but also on the myriad of data locked in the various documents of an underwriting file and collected information from other sources such as site visits, financial reviews, news, websites and more. None of this data that exists outside the workflow system can be managed by today’s second-generation systems.
To address this, underwriting has tried many things. We’ve seen carriers attempt numerous one-off solutions to manage portions of data and analytics to better help the underwriter. One carrier I’m aware of uses an impressive 92 different analytical tools, models, and solutions to help their underwriters. While well-intentioned, these attempts usually make underwriting more complex, more time-consuming, and more administrative.
To meet the needs of underwriting today we need a third generation of underwriting platforms. This next-generation underwriting platform is essentially an underwriting-tailored big data platform that can manage all of the risk and customer information needed for risk evaluation that today’s workflow and policy systems can’t handle. In this way, the other data, models, analytics, and visualizations needed for underwriting can all be managed in a data platform that designed to handle all of this information, and which can interface with the different stages of the underwriting workflow to provide underwriters with the data and insights they need, when they need them.
This future systems approach to an underwriting data platform can be cloud-based and disconnected from the existing policy platforms so that it can be built quickly and incrementally to deliver real underwriting results with the critical data used to make underwriting decisions.