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Streamlining Submission Intake in Commercial Underwriting for Middle Market Segments


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For many insurance carriers, data submission for intake is still a manual, time-consuming process that ultimately takes up valuable underwriter time better spent on risk selection and pricing. We …

For many insurance carriers, data submission for intake is still a manual, time-consuming process that ultimately takes up valuable underwriter time better spent on risk selection and pricing. We offer a streamlined submission intake process for commercial insurance firms that integrates automated tools and manual prequalification to handle ACORD forms and other data formats.

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  • 1. • Cognizant 20-20 InsightsStreamlining Submission Intakein Commercial Underwriting forMiddle Market SegmentsAutomated data extraction of submission documents combined withmanual prequalification by support staff will dramatically improve thequality of data that reaches the underwriter, leading to better risksegmentation and pricing. Executive Summary handle the supplemental documents such as loss runs and schedule of values that accompany Many of the challenges faced by insurers the ACORD forms. This is due to the fact that in commercial underwriting, specifically in the supporting documents sent by agents often middle markets, are directly related to the way arrive in different non-ACORD templates and also submission data is managed and used. Underwrit- in different formats like Excel, PDF and image, ers must spend time on data collection, validation, which require separate extraction algorithms. case triaging and post-issuance activities that often compete and siphon time from more critical This white paper examines the pain points that tasks such as risk exposure identification, risk insurers face in underwriting and specifically in segmentation, loss analysis, rating, negotiation submission intake, especially in middle market and pricing. segments. We then look at the typical submission intake process followed by most insurers and Our experience with clients shows that data suggest an optimized way to bundle submission collection and management continues to be intake and prequalification through a combina- predominantly manual for many insurers, which tion of automated solutions and manual review, leads to poor data quality and completeness. which results in a case that is fully prepared and While insurers have tried to bring efficiency to ready for underwriter analysis. Such a stream- the process by using external vendors to support lined process can dramatically improve the top the data extraction process, this still does not and bottom lines for insurers and enable under- solve the problem of data quality and the multiple writers to focus on risk consulting and relation- iterations with agents to gather missing data. ship building rather than data management and Though automated tools are available that extract case preparation. data from ACORD forms and convert them to the standardized ACORD XML format, they do not cognizant 20-20 insights | september 2012
  • 2. Here and Now has the associated opportunity cost of leaving underwriters with far less time to focus on core Commercial underwriters are continuously underwriting activities and write new business. seeking ways to improve effectiveness and Underwriting transactions take anywhere ensure that the price for a submission reflects between one to three months, depending on the the insured’s risk characteristics to the best size of the account and the processes followed by extent possible. A key factor influencing this is the insurer. Issues in data quality and availability the quality of the submission data used for risk lead to poor risk selection and premium leakage. assessment. There is also a need for more sophisticated tools The way in which most insurers currently manage to determine the health and risk appetite of submission intake has various opportunities the portfolio and ensure insight-based decision for automation and optimization. With the right making. combination of automation and manual prequali- fication by support staff, the submission intake How Does Submission Intake process can be streamlined Happen Today? Based on our and the data quality of sub- missions can be increased While the primary source of commercial under- writing assessment is the set of application forms experience in considerably. received from the prospect insured or intermedi-working with several ary, underwriters use multiple sources of informa- If done right, submissioncommercial insurers, intake can have a great impact tion to decide on an underwriting application. This includes financial history and rating, loss control underwriters spend and be a catalyst from an surveys, loss runs, prior carrier history, catastro- about 15% of their operations perspective as well phe risk reports, geo-spatial information, etc. The as underwriting risk selection time in validating and pricing. It can sharpen the primary methods of submission are via e-mail (MIME) from agents and agent portals. More than and preparing underwriter’s pencil as well 70% of the submissions arrive through these two submission data. as significantly decrease the channels with almost 50% coming in via e-mail.1 turnaround time. The submission data in the e-mails vary in type Key Underwriting Challenges and format. A typical example is a string of Underwriting organizations that address middle attachments by e-mail containing an ACORD new market segments face many challenges, as business application, the schedule of properties depicted in Figure 1. Process inefficiencies in spreadsheet mode and the loss runs in PDF lead to considerable time being spent on data format. Data representation varies by agents as management and communicating back and forth well. To support the submission process, insurers with the agents/brokers. Based on our experience typically use external vendors, which manually in working with several commercial insurers, key in data from the submission forms onto the underwriters spend about 15% of their time in systems. This data is then transferred to the validating and preparing submission data. This insurer systems where the underwriter assistants, Underwriting Challenges Inefficient Risk Process Inefficiencies High Turnaround Time Classification and Pricing • Reduce the overall cycle time and • Reduce the amount of time spent • Improve the quality of submission write more policies without on data gathering and prepara- data coming in from agents. impacting the quality of under- tion and be more productive. • Contextualize sensitive data and writing. • Improve collaboration between analysis to aid risk classification • Eliminate redundant and manual agents and underwriters and and pricing. data entry. reduce the multiple iterations. • Use more sophisticated tools to • Increase responsiveness to determine the risk appetite of the agents/brokers. portfolio. Figure 1 cognizant 20-20 insights 2
  • 3. Pain Points in Submission Intake • Agents send different document types and • Transcription focuses on throughput at the Inconsistent file format types. Poor Data cost of quality. Document • Considerable manual effort in data extrac- Quality • “Transcription” delay also inadvertently Types tion and validation. “transfers and propagates” the errors in original documentation. • Enterprise underwriting gets hit. • Techniques like OCR and pattern recognition are Missing/ • CAT modeling becomes susceptible to errors. Minimal not effectively used for data extraction. Incomplete Technology • No solutions in the market that do end-to-end • Incomplete exposure data and a fragile ERM Data increases reinsurance costs. Usage extraction of ACORD and non-ACORD forms. • No consistent view on the root causes of data • Current methods of data extraction prohibit No quality issues. any analysis on the data gathered. No Measure • No measure of accuracy of the extracted data Application • Basic analytical models to determine quick on Data as compared to the source. of Analytics kills or identify missing information or risk Quality • No information on completeness of the data classification are not used. provided by the agent.Figure 2raters and underwriters spend considerable data-intensive transactions have ensured agencytime validating the information and completing uploads will not become a primary channel forany missing information. Most of the time, only submissions in the near future.2data from ACORD forms is manually extractedand the supplemental information remains as Optimized Submission Intake Process:attachments to which underwriters refer while Our Viewanalyzing risk. Ideally, a major component of risk evaluation should happen during the intake process itself.Some insurers manually extract data in-house. Data intake should also shift from today’s manual-Regardless of whether this process is handled ly-intensive extraction process to a “data qualifi-in-house, data is not typically assembled to fit any cation” process. Intelligent tools can be leveragedparticular data messaging standard (e.g., ACORD to extract data automatically from submissionsXML). Underwriting assistants must validate forms, irrespective of data format, document typeand prepare the extracted data before it can be or channel of submission. Once data is extracted,analyzed by the underwriter for risk appetite and the informational elements should be assembledpricing. and packed into industry standards (like ACORD XML) that can be consumed by carrier systems.Challenges and Issues with Current Manual intervention can ensure the validity ofSubmission Intake Process the extracted information and completeness byThe above intake process throws light on how gathering missing information and adding third-some of the underwriting challenges that we party data information where needed. Basicdiscussed earlier can be attributed to issues with analytical models can be run to determine thethe submission intake process. Figure 2 shows risk appetite and a preliminary risk score. Thus,some of the pain points in submission intake. the submission that reaches the underwriter will be prepared and fully ready to be analyzed. ASome submission-intake-related issues can poten- comparison of the current and proposed view oftially be addressed if insurers had more effective- submission intake is depicted in Figure embraced agency upload (i.e., using dedicatedapplications to handle the submission document Automation in the submission process canprocess). However, agency upload is still seen as help insurers in multiple ways, enabling thema Holy Grail within the P&C industry. The nature to underwrite better. Here are a few potentialof the industry’s three-way relationship (insurer, benefits:agent and insured) along with the enormity of cognizant 20-20 insights 3
  • 4. Submission Intake: Current and Proposed View E-mail Current View Manual Data Prequalification Prep and Support Extraction Agent Upload Risk Assessment Bind and Issue Policy and Quote E-mail Proposed View Automated Data Validation, Prequalification, Review, Risk Data Extraction Assessment and Quote Prep and Support Agent Upload Submission intake includes automated data extraction, prequalification by support group (which consists of running Bind and Issue Policy business rules to determine risk appetite), gathering missing and third party info and a preliminary risk scoring. System Support Group Underwriting StaffFigure 3• Faster turnaround of quotes: Quote more define priorities for further collaboration and business in less time by reducing time spent training of agents for long-term improvements. on extracting data from forms and documenta- tion. This provides the underwriter with more • Avoid excessive processing and reduce effort on quality assurance: Identify common errors time to do core underwriting activities rather and ensure the validity of content through than waiting on forms to be transcribed and do the use of automated business rules. This will quality assurance on transcribed forms. This avoid excessive processing of forms that had also enables the insurer to become a carrier of incorrect informational content. It will also choice for independent agents. help in identifying missing information at the• Effective and faster appetite determina- outset and alert underwriting staff early in the tion: With today’s business process, agents submission process to level-set expectation sometimes are unsure of a carrier’s appetite with agents. This also reduces effort spent on for accepting risk. Automating submission, quality assurance by raters and underwriting without necessitating the agent to log in to assistants. a carrier Web site or do complex uploads, is the low hanging fruit. Agents can e-mail the • Apply analytics: Run basic analytical models to generate risk scores, identify quick declines scanned forms with NAICS code or SIC code and and ensure compatibility with insurers’ carriers can instantly communicate back if the portfolio appetites. risk is within their appetite. The data prequali- fication accompanying the intake process can • Automate further: A standard packaging of further determine if the submission meets extracted data into industry standard XML the insurer’s underwriting guidelines, thereby allows the insurer further flexibility to automate filtering some of the unwanted risks before it basic underwriting data preparation tasks. For reaches the underwriter. example, information extracted from insurance application forms (ACORD applications) can• More meaningful measures and metrics: be used to order a variety of information from Over a period of time, insurers can identify third-party sources such as financial scores, measures and metrics and derive the agent’s claim loss history, catastrophe analysis reports submission data quality pattern. This will help of premises, etc. cognizant 20-20 insights 4
  • 5. • Leverage upload capability for other case preparation. Once the case is considered channels: By performing a business entity for perusal, submission staff should be empow- mapping of standard forms, insurers can easily ered to obtain the necessary territory clear- leverage the investments they have made to ance, preorder reports and initiate risk profil- make their systems upload ready for regular ing. This view assumes investments in domain channels (“snail mail,” e-mail and faxes). training for submission processing staff.• Establish service levels by agents: Conclusion Automating by utilizing a data extraction utility can incorporate priority levels of data It is high time for carriers to reexamine the extraction in batches. These priority levels submission intake process to achieve distinct com- can be determined by insurers on various petitive advantage. Any process or technology parameters such as agency of record, line of improvements in submission intake will instanta- business and geography. neously allow underwriters to focus on better risk selection,The success in tackling the challenges and pricing and customer excellence Technology shouldautomating the submission process relies on two and not worry about the opera- be flexible enough toimportant factors: tional inefficiencies and other handle multiple file activities that add little value to• Right selection and use of technology: the organization. formats and content Advancements in optical character recognition and insurance data exchange standards need to that an insurer A properly balanced combi- be leveraged completely during the submission nation of automated tools typically receives stage. Technology should be flexible enough to and manual prequalification from agents. handle multiple file formats and content that support will highly improve an insurer typically receives from agents. the quality of the submission that reaches the• Realignment of submission process objec- underwriter for review. This will translate into tives and the workforce: With technology underwriter efficiency and effectiveness and also adoption, transcription throughput should no reinforce long-standing relationships with the longer be a concern. Emphasis should be on agents and brokers. validating form completeness and underwritingFootnotes1 Deb Smallwood, “Underwriting Automation: Insurer Plans and Trends,” SMA, February 2012.2 Peter Symons, “The Problem with SEMCI and What Can Be Done About It,” OARBIC. cognizant 20-20 insights 5
  • 6. About the AuthorsAjoy Kumar Palanivelu is a Senior Manager with the Underwriting Practice within Cognizant’s InsuranceBusiness Unit. He has nine-plus years of consulting, business analysis and project management experience.Ajoy has led and executed consulting projects for some of the leading insurance carriers. He has extensiveexperience in developing solutions in niche domains such as underwriting, agency management andinsurance analytics. Ajoy is a computer science engineer and holds an M.B.A. in finance and systems fromBharathidasan Institute of Management. He can be reached at Vijayakumar, AINS, is a Senior Manager with the Underwriting Practice within Cognizant’sInsurance Business Unit. She has six-plus years of consulting, business analysis and project managementexperience and has worked with some of the leading P&C insurance carriers on underwriting and claimsprocessing engagements. Kanchana holds a bachelor’s degree in engineering from the University ofKerala and a post-graduate diploma in management from the Indian Institute of Management (IIM)Ahmedabad. She can be reached at Dhanabalakrishnan, CPCU ARM, is a Senior Business Analyst with the Underwriting Practicewithin Cognizant’s Insurance Business Unit. He has over five years of process consulting, businessanalysis and competitive analysis experience, has worked for leading P&C insurance carriers and hasextensive experience in underwriting, rating and policy administration projects. He holds a bachelor’sdegree in engineering from Anna University and an M.B.A. in marketing and international business fromthe University of Toledo. He can be reached at Srinivasan heads the Underwriting Practice within Cognizant’s Insurance Business Unit.He has over 11 years of experience in catastrophe risk modeling, business consulting and architectingbusiness solutions for large underwriting programs. He is a CPCU, holds an M.B.A. and can be reached CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered inTeaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industryand business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50delivery centers worldwide and approximately 145,200 employees as of June 30, 2012, Cognizant is a member of theNASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performingand fastest growing companies in the world. Visit us online at or follow us on Twitter: Cognizant. World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. 1 Kingdom Street #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA Paddington Central Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London W2 6BD Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 20 7297 7600 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 20 7121 0102 Fax: +91 (0) 44 4209 6060 Email: Email: Email:©­­ Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by anymeans, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein issubject to change without notice. All other trademarks mentioned herein are the property of their respective owners.