Underwriting Workflow Management for Property Insurance
I first wrote about an inspection optimization maturity model framework in 2011 that focused on helping U.S. homeowners insurance carriers select the right policies for inspection and the appropriate inspection type using a predictive analytics-based approach. Back then, the use of predictive analytics to solve this insurance industry problem was a gamechanger, considering that most carriers were using simple business rules and intuition to order inspections. Much has changed since then in terms of rapid advancements in SaaS platform digital capabilities, artificial intelligence (AI)/machine learning (ML), Generative AI (Gen AI), automation, and the fitness of purpose of aerial imagery data for insurance decision-making.
As U.S. Homeowners insurance carriers struggled to achieve profitability in 2023, with a 104.8 combined ratio and record losses driven by inflation in reconstruction cost values and volatility in weather-related losses, upgrading their personal lines property inspection or loss control workflow offers a unique opportunity to reduce the loss ratio component that is driven by non-cat losses. This upgrade will also enable them to deliver a positive customer experience to their insureds during one of the very few direct interactions carriers have with their policyholders outside of claim events. Thoughtful modernization of the loss control workflow is a key strategic lever to drive up underwriting profit.
CoreLogic offers the industry-leading personal lines underwriting inspection workflow management platform, UnderwritingCenter™, which is used by many of the top ten carriers, as well as by many other innovative carrier customers. Based on our experience in this area and by studying and analyzing platform utilization and carrier workflows, we were able to discern what the top-performing carriers do differently than other insurance providers to manage their property underwriting inspection program and their underwriting workflow. This analysis led to a complete refresh of the original inspection optimization maturity model framework to help carriers meet current and future industry and policyholder needs. Through this article, we aim to give you a three-year roadmap to transform your homeowners insurance underwriting inspection workflow to drive business results.
Carrier Underwriting Business Objectives
Let’s start by examining what carriers seek to accomplish in their homeowners underwriting inspection workflow.
Actionable Rate: Carriers are looking to achieve a high actionable rate. Here, actionable rate means that, when a carrier spends $25 ordering an inspection, they are able to find actionable drivers of undervaluation, or condition hazards that they can act on. Carriers want to optimize their inspection spend and are always looking for the right risk-specific inspection vehicles that will help maximize the actionable rate on a significant percentage of policies on their book for the same inspection budget.
Underwriting Expense and Loss Ratio: Carriers are looking for ways to lower their underwriting expenses and free up underwriters to focus on high-value tasks. Carriers are looking for ways to improve the loss ratio and underwriting precision using better risk data, and are starting to place a greater emphasis on renewal book reviews. These days, underwriters are forced to find the right balance between satisfying the ever-growing demand for faster risk reviews to meet changing policyholder and agent expectations versus delivering profitable premium growth that the carrier demands. It is only possible to accomplish the latter through holistic risk reviews that take time. Insurers anticipate that AI and straight-through processing automation capabilities will unlock the answer for driving underwriting productivity and precision.
Customer Experience: Every carrier wants to deliver better, more personalized experiences to their policyholders and producers. Many carriers are increasingly looking for ways to proactively collaborate with their policyholders on preventative risk mitigation efforts.
Time to Market: Carriers seek processes to quickly implement home-grown underwriting innovations OR insurance technology (Insurtech) capabilities in production without incurring high switching costs or creating hard-to-manage solution silos.
What Agents and Policyholders Want
Agents seek new capabilities to deliver better policyholder experiences. They want digital tools that will enable them to collaborate and communicate better with underwriters and their policyholder clients.
Policyholders want privacy and flexibility in the inspection process. They want an intuitive inspection process and transparent underwriting decisions so they can easily understand the policy decisions that impact them. They want faster underwriting decisions and want to minimize the time they spend on securing insurance.