Insurance underwriting is a critical function for MGAs and carriers as they grow their businesses and issue new policies. Skilled underwriting combines data, analysis and experience to accurately assess the risk associated with any given insurance policy. Despite the importance of underwriting, there has been very little innovation or evolution to the largely manual process of making an underwriting decision.
In this article, we’ll take a look at three of the major reasons for bottlenecks in the insurance underwriting process, and discuss how insurance BPO can help mitigate these inefficiencies.
Manual processes and hesitation around digitization
The insurance underwriting process, while data-driven, is traditionally very manual. Because of the time required to pull reports, analyze historical data, and communicate an underwriting decision, it is extremely difficult for many insurance carriers and MGAs to offer self-service and straight-through processing.
What’s more difficult than the reliance on manual processes is the hesitation to upgrade from legacy software systems or change existing processes.
Upgrading to a more digitally-focused system not only empowers carriers to make underwriting and policy decisions based on traditional data such as claims histories but also leverage real-time customer data. For instance, auto policies can be informed by driver behaviors such as hard braking or rapid acceleration, reported to the carrier via GPS beacons customers install in their vehicles. Top auto carriers incentivize customers to use this technology by offering discounts for safe driving, and in turn use trends in overall driver behavior within specific demographics to make underwriting and pricing decisions for other customers.
By working with an insurance BPO partner for process improvement, you can easily begin implementing more data-driven digital processes without having to vet new tools and technologies yourself. Most BPO partners have established relationships with specific technologies and can help you add them to your technology stack. At Patra, we not only have direct relationships with leading InsurTech developers to test and vet new products as they’re released, but we also have a dedicated in-house team to develop unique tech-enabled solutions to better serve specific needs for our partners.
Communication with brokers and third parties
If we had to pinpoint the most common bottleneck insurance professionals face, it’s communication. Working to gather the necessary information for underwriting from brokers, policyholders, government agencies, and third parties such as mortgage companies, banks, building owners, and former insurers. Getting all of this information requires almost constant follow-up. Once sent, information often comes in through various channels, including email, phone calls, fax, and traditional mail.
Working with an insurance BPO partner helps underwriters centralize communication and improve follow-up with outside parties. A good BPO partner will even offer mail services including return mail management, ensuring that no matter where information comes from, it gets added to management systems quickly to empower underwriters to make quick decisions.
Reactive rather than proactive insurance underwriting process
Too often, underwriters focus on a “triage” mindset to address underwriting needs and assist policyholders. Tackling the most pressing tasks first doesn’t make other recurring or low priority tasks go away—in fact, delaying tasks to focus on high-priority items only causes additional stress down the line, and increased frustration from customers.
The most successful underwriters are broker-savvy and able to anticipate the needs not only of insureds but also of brokers. By taking a serious look at historical performance data, attrition, and past complaints about service, underwriters can begin to develop processes to mitigate these issues in the future and offer a better experience for everyone involved in issuing policies.
Working with a BPO partner helps you identify opportunities to divide and conquer the underwriting workload. You might opt to outsource data entry and keep analysis in house, or to completely outsource small accounts that require rule-based underwriting.
If you’re ready to take a hard look at your underwriting process, improve efficiency, and take a more customer-centric approach, the tech-enabled insurance BPO experts at Patra are ready to help. Get in touch to start improving your analysis, expand policy offerings, and grow your business through more efficient underwriting.