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SMA Study Highlights Differences in Commercial Lines Risks

Staff Writer | March 18, 2014

Strategy Meets Action has released a new research report, State of Commercial Markets Underwriting Automation that focuses on findings related to all segments of the commercial lines business, ranging from simple, highly automated risks to highly complex and specialty risks.

The technologies for underwriting automation are showing a maturity that has arrived at the right time to be embraced by commercial lines insurers that are experiencing an expanding requirement for automation, according to Deb Smallwood, founder of SMA. Due to the need for increased capabilities for complex risks, there is uncertainty about what automation support can or should be provided by policy administration systems.

New approaches coupled with the pressures to maintain a competitive advantage, means commercial lines insurers are looking hard at bringing underwriting automation to the next level of sophistication, explains Smallwood. By aligning their investment priorities to the areas that will bring the greatest levels of efficiency, productivity, profitability, and the ability to respond to the demands of a rapidly changing marketplace, commercial lines insurers are leveraging automation for advantage.

“The projections for technology spending on underwriting automation are healthy,” says Smallwood. “Technologies are maturing and insurance company requirements for underwriting automation are expanding. There is a better understanding of what is needed that coincides with a greater appreciation of what is possible.”

Smallwood believes the market is clear about the requirements for the automation of underwriting for both simple and complex risks. The biggest challenge for insurers will be to determine how to meet the underwriting automation requirements in ways that go beyond the traditional approaches.

“There is still some misunderstanding around the role of the policy administration system with complex risks, but the stage is set for complementary technologies and solutions with the policy administration system,” she says.

There is a gap between what business and IT professionals view as pressing problem areas in the automation of underwriting capabilities and Smallwood maintains this gap must be addressed. The business professionals see efficiency and productivity as needing the most improvement, drawing a link between data and processing. IT professionals do not view data for decision-making as a priority.

“By and large, IT does not concur with business on the need to prioritize data-driven decisions and improve effectiveness in complex risk underwriting,” she says.

Insurers and IT solution providers interested in learning more about SMA's commercial lines underwriting automation research and SMA’s advisory services should contact Smallwood at dsmallwood@strategymeetsaction.com.

 


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