Deploy automation to digitise and triage submissions more effectively and write more business

Too much potential business should be a nice problem to have. However, sifting through submissions that may—or may not—make up profitable future lines of coverage comes at a price.

From the time taken to evaluate a risk, match it to appetite and understand existing exposure, onboarding clients can be one of a carrier’s biggest sticking points. To many, this is a necessary evil when it comes to doing business—but it needn’t be this way.

At this year’s Underwriting Innovation Europe Virtual Event, from Intelligent Insurer, Richard Hartley, chief executive officer of Cytora, joins a panel of insurance experts on Tuesday June 29 to discuss why automation is key to streamlining the new business submission workflow, delivering efficiencies that don’t just make for a more scalable insurance organisation but also help unlock superior data capture across the policy lifecycle that drives cumulative improvements in underwriting profitability.

What are the opportunities or challenges in automating submissions?

This is a hot topic because mid-market commercial insurers recognise the need to become digital companies but the risks they receive arrive in an analogue format that is inscrutable to machines. When you log on to Amazon, for example, the app understands who you are and can recommend a film.

When you send a submission to a broker, no-one can understand it apart from a human. You end up spending a lot of money trying to understand a risk that, ultimately, you might not want without capturing comprehensive, granular and reusable data. The analogue submissions process is one of the major impediments to insurers becoming digital organisations.

The chief benefit—aside from becoming a digital business—is that automation puts you on the path to true scalability. You can find yourself writing up to twice as much risk—at the same level of profitability—at roughly the same cost, because you can flow more risk into the business without having to hire more people.

Because they are doing zero processing, underwriters proportionally focus more time on decision-making and post-quote follow-up activity across a higher volume of risks.

It also adds to the data points you can use. When you resolve a risk submission to a real-world entity at the start of the workflow you can significantly expand the volume and granularity of data you capture about the risk across the policy lifecycle which the insurer can use to differentiate in a much more granular way.

It expands the depth and breadth of risk insight recruited from internal and external data sources, and over time helps insurers achieve a better loss ratio.

What does the automated submission process look like?

A good metaphor is the conveyor belt. A risk comes in via email, it is automatically digitised, evaluated against appetite and portfolio fit and then moves along the conveyor belt. If it’s a risk that the carrier doesn’t want, it still owes the broker a quick response, so the conveyor belt routes the risk to a customer relationship manager system and triggers an email. It’s about routing risk to the best destination.

Simple and low complexity risks can be identified, digitised and routed to an auto-rating model where they can be reviewed before the quote is finalised.

Larger and more complex risks that are directed to an underwriter also benefit from the conveyor belt approach. All the upfront processing happens upstream, and risks are moved digitally to underwriter queues specific to their expertise so that the underwriter involved focuses on what they’re best at.

Every risk that flows from source to a destination is fully observable and can be redirected to exception management at any point.

What particular pain points does automation solve?

Automation helps you grow in an intelligent way. It helps you identify the risks you really want, and the risks you want underwriters to dedicate their time to. You can cumulatively grow the number of risks you write that enhance your portfolio without the negative externality of absorbing all your underwriters’ time.

The second pain point it resolves is the speed of response. If insurers don’t respond quickly to brokers, they won’t win the risks they want. This is the concept of anti-selection and it’s a real arms race. Insurers who respond faster to the more attractive risks will win proportionally more of them.

What benefits are there beyond solving inefficiencies and improving insurer reputation among partners?

You start to understand the scope of your addressable market. By looking at all the granular submission data, you can start to do a ‘what if’ analysis. How many more risks would be inside our appetite if we altered a rule? For example, instead of saying that we write restaurants with a minimum of 20 employees, what if we dropped that minimum to 15?

It also helps reveal a segment of submissions that there may currently be no product for. That leads the insurer to analyse whether it’s possible to create a product to serve that segment. It’s revenue they can start capturing at a loss ratio that they think is attractive. Being data-driven at their core can help insurers to respond faster to the market and reduce risk in their new product development process.

What should attendees take away from this session?

The main takeaway is that digitising their risk intake is something insurers can implement now. It doesn’t mean embarking on a five-year transformation programme: it can be implemented cost-effectively, quickly and where there is measurable benefit in a short timeframe.

There are going to be winners and losers in the transition to becoming digital-first insurers. Those who get there first have the potential to radically outcompete the competition by using software platforms to digitally process risks in a way that is fully scalable and cumulatively improves underwriting margin over time.

It’s going to amplify the anti-selection dynamic, and not being on the frontier is going to have an impact. First-mover advantage really does matter.

Richard Hartley, chief executive officer of Cytora, will be speaking at Intelligent Insurer’s Underwriting Innovation Europe Virtual Event (June 28–30, 2021). The event is free to attend for insurers and brokers/agents, but you must register in advance. Sign up to access the content live and on demand here.