Ten Ways to Improve Specialty Lines Underwriting

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to Improve Specialty Lines Underwriting

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10 Ways to Improve Specialty Lines Underwriting |

PROLOGUE

Is it possible to improve specialty lines underwriting? Aren’t specialty lines too….special and unique?

TEN WAYS TO IMPROVE SPECIALTY UNDERWRITING

Yes, you can improve specialty lines underwriting. At FirstBest, we’ve been helping leading insurance carriers improve their underwriting with our collaborative underwriting management, agent portal, and upload solutions for close to NINE years. Our experts have spent thousands of hours in the field with clients looking to improve underwriting profitability, seize new market opportunities, and provide world‐class broker service. We’ve assembled this piece to share the best practices and lessons learned in specialty lines underwriting. We hope you enjoy this revised edition of our most popular eBook! J. Belizaire, CEO

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INTRODUCTION

Specialty insurance is, well special, because each risk can be unique, complex, and require a vast amount of data for evaluation. In many cases, statistical and analytical models just don’t exist for specialty risks. Instead underwriters need to rely upon their own expertise. Can underwriters capture all of that data and make sense of it? And speaking of “capture,” is it possible to capture the specialized expertise of your best underwriters to help others while increasing efficiency and effectiveness? Success in specialty lines insurance is built around the ability to grow the right book of business at a profit, and to quickly identify, tap into, and grow profitable new market opportunities. So how can you improve the performance of your specialty books of business? Specialty brokers expect personal service that’s top notch. How do you ensure consistent, rapid, and quality service – without breaking the bank? According to Deborah Smallwood, founder of insurance strategic advisory firm Strategy Meets Action, “SMA’s latest research (Applying Smarts to Underwriting) reflects a high increase in IT spending in specialty lines underwriting.”

And for good reason: underwriting risk management systems can help specialty insurers drive underwriting profitability in new and existing markets, become more agile, seize new market opportunities, and improve service to brokers. While they might almost seem like “nice‐to‐haves” in standard lines, underwriting profitability, agility, and service lie at the very heart of a successful specialty strategy. They can make the difference between profit and loss. Let’s take a look at each of these requirements.

Specialty Lines

Underwriting

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Can you manage or improve underwriting profitability as well as you’d like? Do your underwriters have all of the data they need to effectively and consistently analyze and accurately price risks right at their fingertips? Can you find experienced underwriters? Do underwriting teams waste time gathering data from disparate sources? Do your systems help your underwriters conduct an informed analysis of the risk or just give them more data-entry work?

Specialized risks require more risk data, third‐party sources, and modeling data for effective evaluation and pricing. So you’ll be able to better manage underwriting profitability and save time by integrating and bringing together all of the risk, modeling, and third party data that underwriters need to accurately and profitably price and tailor terms and conditions to the risk characteristics. Add integrated business rules, knowledge management tools, automated workflows and referrals, and you’ll be able to streamline your process while embedding underwriting quality and discipline throughout to build a profitable book.

UNDERWRITING PROFITABILITY

Capture Complete Risk Data

To make sound underwriting decisions in specialty lines, you need to capture as much relevant data about the risk

as possible – often far more than in standard lines. And that information will often vary by the specific line of business or

niche. Use custom fields, nested questions and data validation to ensure that you collect the right information

to make the right decision. By the way, nested questions and easy‐to‐use interfaces with field validation all make it

possible to collect what you need without placing as heavy a burden on your brokers.

Today, insurers are looking beyond legacy policy administration systems, spreadsheets, side tools, e‐mail, and manual processes, to a modern and flexible underwriting management system that enables specialty underwriting automation, yet still provides the high‐touch underwriting model.

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Deborah Smallwood, Founder, Strategy Meets Action

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02 Share the knowledge of your best underwriters so that other underwriters can rise to their level. Capture the best practices of your best underwriters in business rules, automated underwriting checklists, reminders, and more. Use automated referrals to senior underwriters based on the risk characteristics and the underwriter’s seniority. Enable your team to share their knowledge on the fly, using rich collaboration tools, such as live chat, context‐sensitive notes, screen sharing, and shared attachments.

Tap the Knowledge of Your Best Underwriters

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03 Specialty lines underwriting can require vast amounts of data from numerous third‐party sources. Third‐party data is especially critical for the analysis of specialty

risks. The longer it takes your underwriting team to find, assemble, and analyze that data, the more it costs you in

both expense and potential lost opportunities. Instead of forcing underwriters to hunt for information, bring

third‐party data and reports to them within your underwriting management system. Use prebuilt

connectors to third‐party services so you can get up and running quickly. Take the next step, and preload data into the system’s screens and forms so that underwriters can

not only access the data, but can use it consistently as part of the decision‐making process.

In addition, integrated pricing, analytics, and catastrophe modeling tools can provide immediate, actionable insight

so that your underwriters can spend more time evaluating risks and less time re‐entering data into other systems. Avoid re‐keying by pre‐filling model inputs and

capturing model results directly into your systems.

Bring Together Third-party Data, Modeling Tools, and

Internal Data

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04 Empower your underwriters to tailor coverage, terms, and conditions to the specific risk characteristics, so you can provide coverage while protecting the carrier’s exposure and profitability.

Tailor Quotes

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What happens when you identify a new opportunity or niche? Can you jump on it quickly, or do you need to wait months while hard-coded business rules are added or modified?

Especially in specialty lines, time is money. The faster you can identify, tap into, and scale new opportunities within new or existing markets, the more premium you’ll write. Use flexible and configurable systems, eliminate low‐value tasks so you can scale the business, and increase visibility so that you can quickly address issues and opportunities.

SEIZE NEW MARKETS

Specialty lines require flexible systems that can be rapidly adapted to meet the needs of the riskier or

underserved market niches. Look for systems that let you quickly put in practice the specific fields, rules, and

analytical tools that you need to succeed in your chosen market’s targets and appetites.

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Replace low‐value re‐keying, extra steps to run external systems and spreadsheets, time‐consuming handoffs and bottlenecks, and manual logging and task‐tracking activities. Use systems that streamline your underwriting process with automated upload, once‐and‐done data entry, automated lookups, integrated Web services and models, and underwriter collaboration tools. You’ll actually free up underwriters to review more submissions in less time. You’ll be helping them be more selective and focus on the best opportunities. What’s more, you’ll empower your underwriting team to spend more time with brokers—instead of having to manually feed and coordinate your systems. Yes, you really can scale the business without a corresponding increase in staffing.

Eliminate Low-value Tasks, and Scale The Business 06

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You can’t jump on opportunities you can’t see, nor can you fix the invisible. Gain visibility: use dashboard tools to rapidly identify emerging trends and new opportunities in new submissions. Monitor workloads, production, ratios, and turnaround, within your organization and with your brokers, MGAs, and program managers.

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WORLD-CLASS BROKER SERVICE

How satisfied are your brokers with your service? Are you helping

them be more efficient? How much visibility do your brokers have into

your risk appetite and the status of their submissions? Do you measure

quote turnaround in minutes and hours, or in days and weeks? Do your

underwriters have time to provide personal attention to brokers?

Provide world‐class service by

speeding decisions, enabling broker and internal collaboration, sharing your risk appetite, and providing a

broker portal where appropriate. As is always the case in specialty lines, one

size does not fit all: pick and choose the right level of broker service for

your business.

08 Shorten Your Response

Times, and Improve Service

When you eliminate re‐keying and manual tasks and provide your underwriters with all the information

they need at their fingertips, they’ll be able to analyze the risk, develop the appropriate strategy,

and present the best quotes in less time. They’ll have more time to provide the personal service that specialty

lines demand. And you’ll be helping your brokers provide better service to their customers.

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09 Enable Collaboration

Among Internal Teams and Brokers

Where appropriate, use e‐mail, real‐time chat, screen sharing, attachment sharing, and other

collaboration tools within your underwriting teams, with peers, and with brokers to

expedite information exchange and to speed decision‐making. Collaborative tools can

improve processes between underwriting support staff, underwriters, managers, and

service functions.

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10 Provide a Broker Portal that Includes Prequalification

and Eligibility Rules

Where appropriate, provide a portal for your brokers to expedite the submission process with easier upload and/or

entry, appetite alerts, pre‐clearance, online receipt and review of quotes and binders, and visibility into their book

of business. Build broker goodwill by eliminating wasted time on submissions that won’t move forward. Screen out

the risks you are not interested in so that you can concentrate on the business that does meet your risk

profile. Empower brokers to participate when and where they choose, as appropriate for the risk, the broker, and

the distribution model. In return, they’ll get real value and better service.

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Click here to download a copy of this e-book:

Free Download

FirstBest is the #1 provider of underwriting workstations for property & casualty insurance companies. Built by underwriters for underwriters, the award‐winning technology of FirstBest uniquely delivers speed, collaboration, and data‐powered decisions. With FirstBest solutions, commercial, specialty, and workers’ compensation insurers make better underwriting decisions that rapidly grow their business.

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Ten Ways to Improve Specialty Lines Underwriting