accenture commercial insurance underwriting survey

NA Commercial Insurance

Underwriting Survey

Job Title: Company’s 2012 Net Premiums

Written (USD):

Primary area of focus:

Survey Sample

• Quantitative survey among insurance and reinsurance underwriters in the US

and Canada.

• 559 individuals completed the survey

• Broad range of underwriting roles

28%

29%

33%

10%

Senior Underwriter Underwriter

21%

24%

29%

26%

68%

23%

9%

Commercial lines Specialty lines

Reinsurance

Source: NA Commercial Insurance Underwriting Survey

USD $500 million

– USD $1 billion

USD $1 – Greater

than USD $5 billion

Department/

Product manager

Other underwriting

executive

Copyright © 2013 Accenture All rights reserved. 2

Less than

USD $100 million

USD $100

– $500 million

Key finding #1

Insurance companies are currently

investing and planning to invest in

underwriting over the next 3 years.



12% 11% 9% 10%

26% 29% 34% 33%

62% 60% 57% 57%

Data & analytics Underwriting

(incl. pricing)

Distribution

management (e.g. management of your

sales and distribution

channels including agents,

brokers, Managing

Agents, Alliances, etc.)

Product and policy

administration

4

Underwriting is a major area of investment for organizations in

the next 3 years

Where is your company currently investing or planning to invest over the next

3 years?

Copyright © 2013 Accenture All rights reserved.

Not a priority

Planned in next 3 years

Currently investing


5

Companies with more than $1billion in annual revenue are investing

more in data and analytics when compared to other organizations

Where is your company currently investing or planning to invest over the next

3 years?


Currently investing: Annual income

Data & analytics Underwriting

(incl. pricing)

Product and policy

administration

USD $500 million

– USD $1 billion

USD $1 – Greater

than USD $5 billion

USD $100 – $500 million

Less than USD $100 million

Distribution

management (e.g. management of your

sales and distribution

channels including agents,

brokers, Managing

Agents, Alliances, etc.)

44%

57% 60%

56%

47%

57%

52%

64%

60%

69%

58%

48%

66% 69%

60%

73%


58%

54% 52% 52%

Customer intimacy/

centricity

Cost reduction/

operating efficiency

Speed to market

6

Speed to market is an important factor driving investment in

underwriting capabilities

How important are the following factors in driving your company’s investment in

underwriting capabilities?


Very important

Ease of

doing business


1 month

3 months

6 months

12 months

18+ months

7

However, 72% of respondents believe it takes their organization

6 months or more to launch a major new product

How long does it take your organization to launch a major new product; from idea

to roll-out?


5%

23%

16%

32%

24%


20%

28%

33%

33%

40%

47%

5%

17%

16%

50%

8

Pricing and risk evaluation are priority areas of investment

In which underwriting areas is your company planning to invest over the next

3 years?


Pricing

Risk Evaluation

Process/Work Management

Document Management

Appetite/Eligibility Determination

Loss Control Inspections

Book Mix Management

Exposure Concentration Management

Portfolio Underwriting

None of the above

Select top 3


Increased use of process automation

Increased use of Predictive Models

for risk evaluation and pricing

Increased use of external data to

evaluate risks

Improved collaboration tools for team

underwriting and broker interaction

Centralization of its underwriting

groups

Offshoring of some underwriting

functions

None of the above

No investment planned

14%

33%

49%

51%

51%

57%

1%

1%

9

Process automation, analytics and collaboration tools are the

primary areas being improved

Where will your company invest in the next 3 years, to improve the effectiveness

of its underwriting organization?


Select all that apply

Key Finding #2

Maintaining underwriting/pricing

discipline, and controlling operating costs

and are among the top issues facing

underwriters.



Maintaining underwriting and pricing

discipline

High operating costs/expenses

Lack of quality underwriting

information

Recruiting or retaining talent

Outdated/inflexible systems

Lack of management information and

reports to analyze the business

55%

72%

47%

43%

43%

33%

11

Pricing and operating expenses are major challenges impacting

the company’s ability to achieve their business objectives

What are the main challenges within your underwriting function that impact your

ability to achieve your business objectives?


Selected within top 3 choices


Maintaining underwriting and pricing

discipline

High operating costs/expenses

Lack of quality underwriting

information

Recruiting or retaining talent

Outdated/inflexible systems

Lack of management information and

reports to analyze the business

30%

43%

43%

45%

55%

76%

64%

63%

54%

61%

51%

50%

45%

41%

42%

39%

35%

43%

12

Underwriting pricing is a challenge to commercial lines carriers,

while operating costs are more of a challenge to reinsurers

What are the main challenges within your underwriting function that impact your

ability to achieve your business objectives?


Selected within top 3 choices Lines of insurance

Reinsurance

Specialty lines

Commercial lines


Planned in next 3 years

17%

17%

11%

18%

11%

17%

38%

38%

29%

30%

31%

21%

37%

33%

44%

32%

31%

29% 67%

80%

84%

88%

73%

92%

13

Organizations are actively working towards reducing expenses,

especially through automation and integration with agencies/brokerages

What activities are planned within your underwriting division to reduce

underwriting and operational expense?


Being Implemented

Already Implemented

Increased use of automation

Increased integration with

agencies/brokers

Creating a core underwriting function

Other changes to the operating model

Outsourcing certain tasks

Other Technology investments


No Automation 18% 8%

13% 19%

23% 27%

19%

14%

17%

23% 21%

20%

20%

17%

21%

23% 21% 20%

22%

23%

31%

19% 21% 14%

21%

38%

18% 16% 14% 19%

Specialty $50000 in

premium+

$10000-

50000

premium

20%

19%

Up to

$10000

premium

Overall Reinsurance

14

57% of organizations have automated 50% or less of their

underwriting processes

For the following premium segments, what percentage of the underwriting

process is automated?


At least 50%

Below 50%

At least 70%

90% of more

Key finding #3

The quality of underwriting tools has

improved and training has become even

more important.



2013 2008

Underwriting strategy

Frontline underwriting

practices

Pricing strategy

Accessible & intuitive

tools & systems to

support underwriting

Technical training

programs

Non-technical

training programs

Underwriting strategy

Frontline underwriting

practices

Pricing strategy

Accessible & intuitive

tools & systems to

support underwriting

Technical training

programs

Non-technical

training programs

4%

7%

8%

17%

17%

18%

26%

30%

31%

28%

31%

33%

70%

63%

61%

55%

52%

49%

16

Underwriting processes and tools have improved, as have

training programs

How would you rate the current quality of the underwriting processes and tools

within your underwriting division?


Average (3) Deficient (1,2) Superior (4,5)

Base size: All respondents (n=559) Base size: All respondents (n=115)

6%

7%

12%

28%

25%

32%

26%

25%

36%

38%

39%

34%

67%

68%

52%

34%

37%

34%


17

Investment in technology and training are both crucial to

improving underwriting results

When considering how to improve the quality of your organization’s underwriting,

how would you rate the importance of each of the following areas?


45%

45%

44%

46%

42%

47%

48%

51%

46%

44%

48%

48%

48%

45%

49%

40%

38%

34%

37%

37% 81%

93%

92%

93%

83%

85%

86%

87%

91%

91%

Top 2 boxes = Very Important + Important

Investments in underwriting

technology

Underwriter training

Market research

Risk selection

Risk pricing

Risk appetite

Predictive models

Aggregation of client and policy data

for analytic purposes

Underwriter controls

Identification of fraud indicators

Important

Very important


Management (Department/Product manager + Other

Executive)

Underwriting (Underwriter + Senior Underwriter)

18

Underwriters and management generally agree on how to

improve underwriting quality

When considering how to improve the quality of your organization’s underwriting,

how would you rate the importance of each of the following areas?


92%

93%

92%

93%

92%

86%

87%

80%

82%

88%

83%

84%

85%

84%

85%

90%

90%

92%

92%

93%

Top 2 boxes = Very Important + Important

Investments in underwriting technology

Underwriter training

Market research

Risk selection

Risk pricing

Risk appetite

Predictive models

Aggregation of client and policy data for

analytic purposes

Underwriter controls

Identification of fraud indicators

45%

45%

45%

47%

43%

49%

51%

50%

47%

44%

47%

49%

48%

45%

48%

39%

36%

35%

36%

36%

45%

46%

43%

44%

40%

45%

45%

52%

46%

45%

49%

46%

50%

46%

50%

40%

39%

33%

38%

38%

Important Very important

Key finding #4

Underwriting technology has improved

organizational performance, but

integration is a serious issue for most

companies.

19 Copyright © 2013 Accenture All rights reserved.


Product development tools

Collaboration tools and technologies

Mobile (Wireless) technology for customers

Geo-coding or mapping tools to manage exposures Automated underwriting decisions (no touch underwriting)

Underwriting workstation

Telematics

Mobile (Wireless) technology for agents

Mobile (Wireless) technology for underwriters

Use of social networking or crowd

Web quoting facility for agents/brokers

Policy administration

Web Inquiry for agents/brokers

Cross sell/lead management

Agent/broker download

Agent/broker upload

12%

14%

23%

15%

20%

13%

24%

23%

21%

19%

12%

7%

11%

14%

9%

13%

20

One in two organizations are implementing, or will soon implement,

product development tools, collaboration tools and telematics

Within your underwriting division, what is the status of the following technologies?


21%

21%

21%

19%

19%

19%

19%

18%

17%

17%

16%

14%

14%

14%

12%

10%

36%

31%

27%

31%

27%

31%

35%

30%

27%

30%

26%

30%

27%

31%

31%

22%

31%

34%

29%

35%

34%

37%

22%

29%

35%

34%

46%

49%

48%

41%

48%

55%

No Activity Planned in next 3 years Being Implemented Already Implemented


21

Most companies are implementing, or will soon implement, geo risk

concentration, underwriting support and exposure management tools

What management information and analytic technologies is your organization

currently implementing or planning to?


2%

4%

7%

8%

8%

9%

8%

11%

11%

12%

10%

11%

17%

17%

15%

16%

17%

14%

11%

18%

34%

26%

32%

31%

28%

32%

32%

29%

35%

32%

53%

60%

44%

43%

50%

42%

43%

46%

44%

38%

Management reporting

Operational reporting

Book/portfolio management

UW support

Pricing analysis and management

Exposure management

Risk selection/tiering

Submission routing

Cross selling

Geo risk concentration

No Activity Planned in next 3 years Being Implemented Already Implemented


Agent/broker upload







Geo-coding or mapping tools to manage exposures



Use of social networking or crowd sourcing for risk information

Automated underwriting decisions




Telematics

22

Only half of underwriters feel that the technology used within

their underwriting division is very effective

How effective are the current technologies within your underwriting division?


Respondents

(n=276)

(n=237)

(n=229)

(n=234)

(n=228)

(n=199)

(n=184)

(n=162)

(n=168)

(n=172)

(n=163)

(n=167)

(n=151)

(n=144)

(n=136)

(n=94)

55%

49%

48%

48%

46%

41%

37%

35%

35%

34%

34%

34%

31%

29%

29%

22%

65%

49%

45%

50%

46%

40%

54%

48%

52%

52%

55%

50%

51%

50%

49%

49%

Already Implemented Very effective


Agent/broker upload







Geo-coding or mapping tools to manage exposures



Use of social networking or crowd sourcing for risk information

Automated underwriting decisions




Telematics

50%

48%

50%

43%

46%

42%

35%

33%

35%

36%

34%

31%

31%

30%

30%

20%

64%

44%

38%

46%

38%

38%

54%

45%

54%

47%

54%

46%

45%

47%

45%

44%

61%

50%

45%

53%

46%

40%

40%

39%

35%

33%

33%

37%

30%

28%

27%

25%

66%

56%

55%

55%

56%

43%

53%

51%

50%

58%

56%

55%

59%

54%

53%

53%

23

Managers are more likely to think their current technologies are

more effective than front-line underwriters

How effective are the current technologies within your underwriting division?


Already Implemented Already Implemented

Underwriting (Underwriter + Senior Underwriter)

Management (Department/Product manager + Other Executive)


24

Insurers feel that their ability to drive profitability has been

improved through the use of underwriting technology

How has underwriting technology improved your underwriting performance?


5%

10%

10%

9%

12%

12%

23%

21%

23%

25%

25%

31%

72%

69%

67%

66%

63%

57%

Increased your ability to drive

account profitability

Automated simple tasks

Increased your ability to work

with agents

Increased your ability to work with

raters and assistants

Increased your ability to

cross-sell accounts

Increased your ability to obtain higher

authority levels

Not at all (1,2)

Average (3)

Very much (4,5)


16%

...Decreased workload

...No change

...Increased workload

30%

54%

Base size: All respondents (n=559)

25

Most underwriters feel that technology has actually increased

their workload

Overall technology has…


2013 2008

30%

34%

...No change

...Decreased workload


36%

Base size: All respondents (n=115)

Increase of 20

basis points

since 2008


26

Underwriters have seen their workload increase more than that

of management



Insurance Title

17%

15%

...No change

52%

Management

(Department/Product

manager + Other Executive

33% ...Decreased workload 27%


Underwriting

(Underwriter +

Senior Underwriter)

56%


27

Speciality Lines have seen the highest increase in workload



Lines of insurance

17%

14%

12% ...No change

62%

Specialty lines

24% ...Decreased workload

37% 31%


Commercial lines

51%

Reinsurance

52%


2013 2008

System is not intuitive, not easy to use

System Performance Issues

Insufficient Training

Lack of Process Integration

Lack of Data Integration 81%

67%

56%

48%

48%

Base size: Respondents who indicated

workload increased through technology (n=305)

28

Data and process integration are the main causes of increased

workloads, along with insufficient training

Please rank from 1 – 5 the reasons why technology has increased your workload



System is not intuitive, not easy to use

System Performance Issues

Insufficient Training

Lack of Process Integration

Lack of Data Integration 72%

81%

38%

53%

55%

Base size: Respondents who indicated

workload increased through technology (n=47)


For more details on North America

Commercial Insurance Underwriting

Survey, visit:


insuranceblog.accenture.com

accenture commercial insurance underwriting survey

Economy & Finance

underwriting capabilities

policy administration

insurance companies

pricing product

business source

major new product

companys investment

major area of investment