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The latest developments across the P&C insurance industry regarding fraud, risk and compliance.
26 April 2016

How can commercial insurers make the change to straight-through processing?

The time has come to take the automation of commercial lines insurance to a higher level. Combining state-of-the-art technologies in the underwriting process and policy administration leads to lower costs for the insurer. This makes it easier to do business and to approach new markets. Automation (straight-through processing) can also greatly improve the results from underwriting.

Modern policy administration systems

How-can-commercial-insurers-make-the-change-to-straight-through-processing?Modern policy administration systems for insurance of commercial lines have become more mature and more extensive. Many of these systems today are able to automate components of the underwriting process. The innovation, however, is based on the fact that more and more exciting, contemporary solutions are available that can bring automation directly to the underwriter’s office. These solutions can offer support in the management of the entire underwriting process. Underwriters will get better insight into policy applications and will be able to offer faster service to intermediary people through a streamlined workflow.

Complex IT landscape

For every commercial insurer there is a way to profit from the increased automation. The true power of modern technology, however, is not so much about the implementation of separate tools, but about connecting these different components. Insurers have a complex IT landscape, yet the link between various systems is not really taken into account. The incorporation of, for example, an application funnel and a damage report funnel often lacks a standard underwriting module or a standard incident registration system. These features often have to be constructed and added after wards. This causes many innovations to be left on the shelf.

Straight-through processing (STP)

Insurers that are not well-informed about the implementations that are already taking place in the market, are more likely to get stuck with higher costs for underwriting and inferior results from the underwriting process. If the automation speeds up in line with the market expectations, it can become a never-ending challenge to keep up with the service level that early adopters can offer to their intermediary people and brokers. And this can even mean that the stragglers lose their position in the market.

Why are all commercial insurers not selecting and implementing software solutions, even though they can help them to stay ahead in the market, or at least keep up with the current top? One plausible explanation is that new software is often geared to old business models for insurers. However, software providers continue to develop. The question therefore is: how quickly can insurers make an investment in and an organisational change to straight-through processing (STP)?

Misconceptions

In addition, there are two big misconceptions. First of all, there is a lack of clarity about what a modern policy administration system can mean for the commercial lines underwriting process. Often people assume that a state-of-the-art system for policy administration offers the underwriter next-gen automation. And secondly, it is often wrongly thought that managing an overlap of duplications between a policy system and underwriting solution is very complex. Reality has shown that linking advanced solutions and technologies to a modern policy administration system leads to visible results and improves the competitive position.

Investing in the bigger picture

The commercial underwriting process is changing. Software solutions today offer an in-depth and complete package of functionalities specifically developed for underwriting at commercial lines. The products effectively respond to the changing needs of insurers and offer opportunities for growth. These solutions actually lift insurance for the commercial market up to a higher level by adding the right amount of automation. The right balance between the art and science of underwriting is important in this. Insurers should not add software tools to an old back-office system, but invest in the bigger picture.

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