Underwriting is the lifeblood of the insurance industry. Insurance underwriting teams are responsible for analyzing risk in insurance proposals, determining policy terms, and calculating premiums on the basis of actuarial, statistical, and other background information.
Effective underwriting ensures that firms offer people policies that best suit their needs, leading to improved customer satisfaction and better overall profitability. In contrast, an ineffective underwriting process can lead to increased risk and long-term financial consequences.
In this article, we’ll explore some of the key dynamics and market forces in play affecting insurers operating in the underwriting space – and how engaging with the right underwriting support services partner can make all the difference.
Underwriting – an Industry in Transformation
Ongoing technological transformation coupled with the disruptive social and macroeconomic trends of the last two years has impacted the underwriting industry in several ways. In a recent report, Deloitte asserts: “Underwriters need to be able to remain agile and flexible, and use their experience and judgment to manage portfolios, adapt to changing market conditions, maintain broker and client relationships, and keep coverage and pricing realistic in a competitive market.”
The report highlights some of the most notable forces in play:
Increased Digitization
In an effort to achieve greater levels of efficiency and meet evolving customer expectations, most insurers are embracing greater digitization within their operations, and underwriting is a key focus area.
Artificial intelligence and analysis of new forms of contextual data are allowing underwriting decisions to become more proactive. Firms can monitor portfolios and understand associated risks in real time (rather than relying solely on historical data.) Thanks to the use of sensors, massive volumes of additional, real-time data are available to insurers to analyze and monetize.
Cyber insurance is also a hot topic. Today, threat actors are constantly refining their tools and attack strategies, which means reactive underwriting becomes less reliable.
Insurance firms need to evolve their underwriting tools and skillsets to remain profitable and relevant in this fluid and dynamic marketplace.
The New Face of Risk
At the same time, the nature of risk itself has fundamentally changed. For example, the advent of mixed-use vehicles means that the lines between personal and commercial auto insurance are beginning to blur.
And the popularity of remote working means that the boundaries between workers’ compensation and homeowners’ coverage are overlapping more than ever.
Talent Challenges
The Great Resignation and The Great Retirement have seen businesses in all industries struggling to hire and retain key talent, and the underwriting sector is no exception. It’s estimated that nearly a half-million insurance workers will leave their jobs in the next few years.
The challenge is being exacerbated by the ongoing digital transformation of the insurance sector we touched on above. Many underwriting professionals are concerned about being replaced by automated systems.
High levels of attrition coupled with the need to launch new, niche products mean that underwriting talent is scarcer than ever. The fact that few firms can afford to invest significantly in training only contributes to the lack of trained underwriting resources.
Another theory that experts put forward to explain the lack of interest in underwriting roles is that much of the workforce lacks experience and understanding of the profession (and insurance, generally speaking.) For example, Millennials have lower rates of ownership of houses and cars. They’re more inclined to share personal costs with one another, stay in temporary lodging or rent, and travel abroad.
The Way Forward
To address these challenges, many insurance companies are turning to underwriting outsourcing support services.
Outsourced underwriting support firms can provide resources that:
- Allow licensed underwriting professionals to focus on what they do best
- Diligently take care of the more routine tasks that underwriters’ busy schedules often make it difficult for them to attend to
The best underwriting BPO partners have people that can take care of the full spectrum of underwriting support services, ranging from application processing, eligibility checks, and account verification.
They can also scale at short notice to handle their client’s planned and unplanned work cycles.
It’s important to note that outsourcing to an underwriting support partner isn’t about finding the “cheapest” solution available. It’s about leveraging resources in the most efficient way possible so those who are working in-house can use their talents more effectively.
Benefits of Outsourcing Insurance Underwriting Support
Here are some of the most compelling benefits of outsourcing your underwriting support tasks to a trusted BPO partner:
You Get Things Done Faster
Since potential policyholders are likely shopping around for multiple options, it’s important to deliver estimates promptly. Outsourcing underwriting support needs to the right BPO partner can increase efficiency and significantly decrease the time it takes to fully underwrite each proposed policy as the support partner takes care of time-consuming admin activities on your behalf.
This allows you to maintain the attention of prospective policyholders and increase conversion rates.
You Can Focus on Your Core Business
If you decide to outsource your underwriting support activities, you’ll benefit from a dedicated admin support team that frees up your underwriters’ time to focus on strategic endeavors such as analyzing your profitability at both a product and customer level, segmentation, negotiation, and customer relationship management.
It Saves You Money
With outsourcing support, you needn’t invest heavily in hiring, training, and up-skilling in-house resources. In addition, there’s no need to provide benefits such as disability and health insurance to new full-time employees. This is particularly attractive for startups that need to focus their scarce resources on building their business quickly rather than investing budget in hiring a permanent headcount.
Most outsourced underwriting support tasks can be performed remotely, so there’s also no need to pay for extra office space.
You Can Access the Best Talent in a Tight Labor Market
In a post-pandemic world, there’s an unprecedented skills shortage across all industries – including insurance – and many people are favoring roles that allow them to work remotely.
This makes going the remote underwriting support services route a sound business strategy.
Want to Impress Your Policyholders? Collaborate with Covenir
Hiring a reputable outsourced underwriting support team allows insurance companies to enjoy faster underwriting times, lower costs per underwriting task, and, ultimately, a better bottom line. This sets the stage for the insurer to become more competitive in an increasingly crowded space.
At Covenir, we specialize in helping insurers streamline their operations, improve policyholder experiences, and achieve their desired growth objectives. Our onshore support experts are more than simply “generalist” administrators or assistants. Each is seasoned in and passionate about the business of insurance and its processes, well-versed in the language of insurance, and has a deep understanding of the entire insurance ecosystem. All this ensures our teams can confidently answer customers’ questions on your behalf and serve as a true and authentic reflection of your brand.
Insurers and MGAs love the Covenir underwriting support team because we can do almost anything – often on short notice.
From full policy processing to endorsements, new business, or special projects, we’re here to help your operation run smoothly.
Our teams are on hand to plug into your workflow as needed or every day. Think of us for:
- Processing new business renewals, endorsements, cancellations, and reinstatements directly in your system of record
- Generating legal compliance notices as required by state regulations
- Updating electronic and paper policy records
- Responding to policyholder inquiries and requests via phone, email, and chat
- Retention or cross-sell campaigns
- Sending required policyholder notices
- Supporting your expansion into a new product line, such as a California earthquake
- Servicing both personal and commercial lines – 100% onshore
- Short-term projects and complete book rollovers
- Performing quality control and new business acceptance reviews
Technology-centric and human-enabled, we’re standing ready to help get you where you’re headed next, fast. Our support team takes pride in being part of your team, not just an extension of it. With our help, you can achieve more in less time – without sacrificing quality or results.
To learn more about our underwriting support services capabilities, contact us today at (508) 471-5031 or info@covenirbpo.com.