Increasing Underwriting Productivity, Without Increasing Headcount

Recognize Where the Problems Are

Technology is part of the answer, but it’s not the whole answer. As anyone who’s experienced a prolonged, painful IT rollout can attest, just adding a new system or upgrading a PAS isn’t necessarily going to help - and it’s very easy to end up right where you started, minus a lot of money and time. 

The reason for this is that technology is rarely the ultimate cause of problems in the underwriting process. While archaic legacy systems can definitely make things worse, many underwriting problems need to be addressed more holistically. If the process itself is broken, then trying to just do the broken process faster is unlikely to actually help. 

To make meaningful improvements for your underwriting team, you need to recognize what’s causing problems for them in the first place. This lets you focus on a solution for the root problems, rather than just trying to treat the symptoms. This is particularly important for organizations with very limited technology budgets. If you’re only able to buy one solution, that solution needs to be able to provide maximum returns. 

Here’s some of the most common issues that impact underwriting productivity, and how to think about solutions.

Problem #1: Prioritizing an Overwhelming Number of Submissions

For most underwriters, an overflowing inbox is a fact of life. With more deals coming through than they have time to review, many underwriters default to just reviewing them in the order they come in. However, many deals are time-sensitive, and the first-in first-out approach means that underwriters can lose out on good business simply because it didn’t come up fast enough in the queue.

Compounding the problem is that a significant proportion of submissions on an underwriter’s desk will never translate into bound business, either because the opportunity ultimately isn’t winnable or because it isn’t a good fit for the portfolio appetite (in fact, one insurer shared that their underwriters spent up to 40% of their time on “unwinnable” deals). Without a better way to prioritize, however, underwriters are stuck digging through the bad opportunities in order to get to the good ones (hopefully before they expire). 

How to Address It

 In the past, technology has tried to help by speeding up existing workflows, with limited results. “FIFO but slightly faster” will never really move the needle. To meaningfully increase underwriting productivity, your underwriters need to be able to focus their efforts on the best opportunities, without having to wade through all the bad ones. 

The best solution, then, is one that can help triage incoming submissions, and bring the most promising deals to the top. Instead of going deal-by-deal through their inbox, underwriters can focus their time on the highest-appetite, most-winnable submissions. 

Rather than trying to increase the quantity of deals worked, this approach increases the quality. Underwriters might work fewer submissions overall, but since the submissions they do work are the best opportunities on their desk, hit rate and profitability increase. The ultimate result? More bound in-appetite deals, with the same number of underwriters. 

Problem #2: Organization Not in Alignment

You know what you want your team to be doing. Your organization has goals for your overall portfolio, and a strategy for how to meet those goals. But how well is your team progressing towards those goals? And are they actually following the guidelines you provided? 

If you’re like many underwriting managers, you don’t actually know for certain. With performance data reporting delayed by weeks (or months), there’s practically zero visibility into how the group is progressing toward goals - for you or your team. Historically, it’s been difficult for underwriters to see how their individual efforts are contributing to the overall portfolio, and for management to track against strategy or make course corrections.

For smaller MGAs and mutuals, this common problem can have very serious consequences in the form of increased reinsurance costs. When the organization produces results that widely stray from the plans they shared with risk capital partners, it can lower their partners’ confidence in backing them. They may decline to continue providing capacity - or raise the costs past what MGAs and mutuals can afford.

How to Address It

The root of the alignment problem is visibility. No one in the organization has the portfolio-level view that’s necessary to track performance and stay aligned towards goals. Yet another set of guidelines won’t help; instead, a solution needs to increase visibility into the status of the portfolio, and how individual submissions fit into the overall portfolio strategy. 

When it comes to technology, look for a solution that takes a more holistic view. A system that allows you to build in your portfolio strategies and appetites can provide more meaningful decision support to your underwriters, surfacing portfolio-level goals and insights when they’re considering a risk. Modern AI can pull reports and surface data much more quickly than a human, and can help keep underwriters apprised of the latest portfolio developments in real-time.

At the same time, flexibility is important. Part of the reason that portfolio visibility is so important in the first place is that appetite can quickly change, and today’s high-appetite submission is tomorrow’s accumulation problem. If every change in strategy requires a long, expensive IT project, the system won’t be able to keep up with the reality of your portfolio, and won’t be able to provide that meaningful input into the underwriters’ decisions. In fact, “decision support” based on outdated portfolio information may well make things worse. 

To improve underwriting productivity by increasing your team’s alignment with the portfolio strategy, look for a solution that can provide real-time feedback, and allows business users to adjust rules, goals, and guidelines.

Problem #3: Too Many Disconnected Systems

Between opening a submission and closing a deal, underwriters touch an average of 11 different systems. This can range from different systems for each line of business, to different systems for each stage of the process, to various siloed tools and data sources. All of these systems add time to the overall workflow and lengthen the process before a quote can be sent (in some cases, by days or weeks).

Not only does this waste underwriters’ time, but it also makes the organizational alignment we just talked about even harder. If your team works across a dozen different systems and none of those systems talk to each other, building in your portfolio goals and appetite is virtually impossible. 

How to Address It

The answer to this seems straightforward - replace the multiple systems with a single system that can provide all of the necessary functionality. Historically, however, these kinds of systems projects have been a minefield for insurers. It’s not at all unusual for a large IT project to swallow several years and millions of dollars, without providing much improvement (or even making it worse, by creating yet another siloed system to contend with). For mutuals and MGAs, the sunk cost might eat up the entire budget for tech improvements, for quite some time.

So what’s the answer? It may sound glib, but the solution to the too-many-systems problem is to find a solution that provides a single system for everything from submission to quote+bind, that can actually deliver what it promises.

During the research phase, pay attention not just to what a solution provider says about their offering, but what their customers say. Are their customers willing to go on record and attest to their good results? Are there metrics included? Strong customer stories are a positive sign that a solution has helped other insurers accomplish their goals, and that it’s worth learning more.

The expectations on underwriting organizations just keep growing, but their headcount budgets do not. For MGAs and mutuals with limited resources, it’s more important than ever to find ways to meet ever-increasing goals with the team they already have. The right technology solution can help tackle some of the biggest problems affecting underwriting productivity: helping underwriters find the best business faster, ensuring they’re always working towards portfolio goals, and avoiding getting bogged down in a series of system siloes. 

Federato’s RiskOps platform delivers a sleek, modern underwriting experience combining a unified workflow with real-time risk data and bleeding-edge AI to proactively balance a portfolio. To learn more, get a demo today.