Modern Underwriting: Leveraging New Intelligence Capabilities Featuring as an example: L&T Infotech AccuRUSI Author: Deb Smallwood, Partner Published Date: February, 2015 This perspective is based on SMA s ongoing research on underwriting and the modernization of legacy environments. L&T Infotech has purchased distribution rights. 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 1
Table of Contents About This Perspective This SMA Perspective is a summary of SMA s ongoing research on underwriting and the modernization of legacy environments. L&T Infotech has purchased distribution rights for summary results of selected research and opinion. This is not paid-for research. New Possibilities for Underwriting 3 Rethinking Underwriting Automation Reward and Risk Modern Underwriting Business Capabilities 4 The Modern Underwriting Workstation Foundation of Information and Insight Modern Underwriting Technology Capabilities 6 The Fundamentals Finding the Right Approach About L&T Infotech 7 L&T Infotech Company Overview AccuRUSI Breadth and Functionality Strategy Meets Action Commentary 10 About Strategy Meets Action 10 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 2
New Possibilities for Underwriting Underwriting capabilities are instrumental in differentiation today. To achieve success and compete effectively, modern underwriting approaches and solutions are becoming an imperative. Thanks to maturing and emerging technologies as well as an abundance of information, there are new ways to accomplish far-reaching underwriting transformation. Underwriting capabilities are instrumental in differentiation today. In fact, insurers are just on the cusp of finding out how truly important they will be in shaping the future of the industry. The bottom line is that to achieve success and compete effectively, modern underwriting approaches and solutions are becoming an imperative. When it comes to underwriting large complex risks, the touch of highly skilled and experienced underwriters is still required to ensure the right mix of coverages and that the price is properly formulated in order to financially protect the exposures and risks. Historically this touch of art has been a manual process, one that is highly dependent on people and experience, with the blend of some automation. Today, with the automation, tools, data sources, and analytics that are now available, there are new possibilities for modernizing these traditional touch points with the next generation workstation. Rethinking Underwriting Automation Currently, the implementation of modern policy administration systems has been the primary solution avenue for modernizing the full underwriting process. Although these investments have brought significant business benefit and value to the overall underwriting process, they typically fall short when it comes to automating the desktop of the underwriter for the management of complex risks. The gap is real and the impact significant. SMA views the next generation underwriting workstation as the solution to close this gap in capabilities. It becomes the vehicle for improving expense ratios and underwriting productivity, using automation and the aggregation of information across different applications via a single interface to enable a single view of risk. So why is this the right time to rethink the underwriter s desktop? Why now, especially when it appears that the traditional approaches are presently providing adequate support? And why now, when good financial results are evidenced by acceptable combined ratios on the books of business? Part of the reason is that the world that surrounds and heavily influences insurance is rapidly changing. And at the same time, there are changes taking place inside the industry. But, the need to grow profitably with new risks continues. The fact is, the more accurately an underwriter is able to assess and price (especially for new risks), the better the outcome for both the risk and the portfolio. Competitors are not standing still. SMA s recent research, 2015 Strategic Initiatives: Making sense of the shifts, shows the adoption rate is picking up, with 26% of commercial lines insurers investing in underwriting solutions. Reward and Risk Thanks to maturing and emerging technologies as well as an abundance of valuable information, there are indeed new ways to accomplish far-reaching underwriting transformation. It is possible to make smarter, more informed decisions by using the new types and sources of data that are currently available. New levels of sophistication in information about risk and customer intelligence are possible. The ability to assemble, massage, and interpret information is creating new opportunities to better assess the risks 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 3
and to gain new risk intelligence at the coverage and the portfolio level. There are new ways to keep the methodologies and the tools used by the underwriter current. While these new possibilities are profound, the risk associated with not rethinking the underwriter s desktop is equally profound. Those insurers that fall behind stand to lose major ground in the competitive game. The impact will be experienced in many dimensions. The laggards will likely lack the ability to respond quickly to changing conditions and new opportunities. They will not have the ability to easily and quickly utilize new sources of data, capitalize on social data, and implement new analytic tools. They will find it difficult to scale with market and competitive shifts and nearly impossible to adjust quickly to market and pricing changes in real time. It will become more and more difficult to enforce shifting underwriting guidelines. And the last, but very real risk: seasoned, experienced underwriters are reaching retirement age, and that means a significant loss of underwriting knowledge and skill for the organization. This loss can be difficult to manage because replacement experience and skills are not readily available. Hence, there is another key reason for insurers to deploy more modern underwriter desktops that fully capitalize on new sources of intelligence and insight. Modern Underwriting Business Capabilities Modern underwriting business capabilities offer new levels of efficiency and effectiveness. Powerful next generation desktop solutions deliver advanced risk intelligence a single view of the customer, the risk, and the portfolio that improves productivity, enables better underwriting decisions, and enhances customer relationships. Modern capabilities for the underwriter and underwriting processes offer new levels of efficiency and effectiveness. The possibilities are remarkable, enabling new levels of competitive advantage and the ability to scale to meet changing conditions. Transformation requires more than an enhancement of fundamental underwriting capabilities. Insurers must think differently about tools and automation, viewing capabilities with a new mindset and focusing on how to deliver a better value proposition for the customer and the business. At the heart of underwriting transformation, sits the next generation underwriting workstation. These powerful desktop solutions are able to deliver next generation business capabilities by providing a more comprehensive view of risk assessment and risk analysis combined with the insights to optimally manage the risk. This advanced risk intelligence enables a single view of the customer, the risk, and the portfolio a single view that improves productivity, enables better underwriting decisions, and enhances customer relationships. The Modern Underwriting Workstation A modern underwriting workstation builds on the foundation of the policy administration platform, extending the value and power of modern policy system investments. Current SMA research shows the support for many of the underwriter s activities for complex risks falls outside the policy administration system. A modern workstation provides support for all these activities. It allows insurers to capitalize on an increasing amount of third-party and social data and to use new tools and technologies that facilitate better processes, better insights, better audit trails, and new approaches to the management of the business. Historical information and insight on trends are readily available. Analytics are applied in real time, delivering analysis that is more current and comprehensive. The modern workstation creates a collaborative working mode with full visibility. It gives 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 4
insurers the ability to capitalize on mapping and geospatial location intelligence, predictive analytics, and advanced models creating an optimized and innovative underwriting environment for complex risks. Foundation of Information and Insight The foundation for a next generation underwriting workstation is information and insight. The workstation itself must be able to capitalize on that information and insight with intuitive, intelligent, and interconnected competencies. Intuitive The intuitive capabilities of a modern underwriting workstation give underwriters just the right additional information and insight, with an appropriate level of automation for each risk and activity. Intuitive business competencies make it easier to understand what particular data, information, processing support, and tools the underwriter needs to best assess and address a particular risk at a particular point in time. Intuitive capabilities provide an underwriter with guided flexibility to make real-time adjustments and fine tune rules and pricing based on specialized knowledge of the risk, client, and portfolio. Intelligent The intelligence capabilities of a modern underwriting workstation can significantly augment the expertise and experience of the underwriter by incorporating and taking advantage of new sources of data and innovative models. The advanced functionality enables underwriters to apply additional intelligence and consequently make better decisions. At the same time, controlled discipline is applied, resulting in process and pricing consistency, proper controls, override with reason, automatic referrals, and more. Interconnected The interconnection capabilities of a next generation underwriting workstation make it possible to connect seamlessly with everything an underwriter needs. The workstation performs as an integration hub, connecting the flow of any data (incoming and/or outgoing) to any system facilitating an easy and complete plug-and-play connection to manual checklists, common and specialized data sources, policy and other core systems, and more all without rekeying or duplicating data. The integration extends easily to automated workflow, document management systems, and various other processes, systems, and tools. Information and Insights There is real business value in the information and insights that a modern underwriting workstation is able to deliver. New types of data can be exploited, including third-party data. Additional and more advanced analytics can be leveraged. A wide variety of new models can be considered. More advanced levels of business management are possible at both the risk and portfolio level. Powerful visualization, thanks to sophisticated mapping and location intelligence, helps drive improved judgment and decision. 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 5
Modern Underwriting Technology Capabilities The technical requirements of a modern underwriting workstation expand beyond what a modern policy administration solution (PAS) is designed to provide. The technology requirements include a risk intelligence platform that allows easy integration with tools, spreadsheets, models, and external data. This platform needs to support an environment that integrates easily with internal systems and data sources and models as well as external data sources. The platform makes it simple to capitalize on maturing and emerging technologies such as those that deliver location intelligence and geospatial and mapping insights. The Fundamentals The fundamental requirements for modern underwriting technology capabilities are shown in Figure 1. Figure 1. Modern Underwriting Technology Capabilities The required technical capabilities of a modern or next generation underwriting workstation include: Source: Strategy Meets Action 2015 Configurable workflows and rules engines The workstation must use modern configuration tools. By augmenting rules-based workflow management with analytics and intelligence, the management of workflows can be much more dynamic. The routing of work and the assignment of cases can be automatically orchestrated based on accurate knowledge and system-generated wisdom from automated underwriting guidelines and rules. Modern platform and real-time synchronization The workstation must be fully integrated with quote, policy, billing, claims, financial, social, and demographic data as well as data from other public data sources and analytic models. Examples include CAT models, flood and geospatial mapping, and emerging technologies. Flexibility is of the utmost importance. This means leveraging SOA principles so that 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 6
plug-and-play solutions can be integrated and deployed quickly and there can be an easy exchange of data from a wide variety of sources. It must be possible to dynamically integrate new and real-time data, as well as big data. For most insurers, this ability to dynamically integrate new information and new models is a major difference-maker one that has the potential to significantly impact outcomes. Advanced business intelligence dashboards, alerts, and analytics The modern workstation should give insurers the flexibility to integrate any and all data sources, models, and analytics to provide advanced decision making and enhance visibility in the area of risk assessment and pricing. Advanced user experience platform The interaction between the underwriter and the system is extremely important. The workstation must use modern user experience technologies and responsive design principles making it possible to work on any device and any platform as well as connect to different back-end systems and data sources. The workstation must have the power to deliver a user experience that is practical, effective, meaningful, and valuable. Underwriters should perceive the workstation as a welcome assistant, one that is easy to use and efficient in helping them do their jobs. Finding the Right Approach Finding the right solution approach can be a complex undertaking. Custom-built solutions for modern underwriting workstations can offer many advantages and in many cases, provide a powerful approach to extending capabilities to meet distinct business needs. Finding the right solution approach can be a complex undertaking. It is important to consider the IT environment, the state of the policy administration systems being used, and the level of risk analysis that is being conducted by the underwriter outside of the policy administration system. For most insurers, given the complexity of needs and environments, packaged software is not always the optimal solution. Custom-built solutions for modern underwriting workstations can offer many advantages and in many cases, provide a powerful approach to extending capabilities to meet distinct business needs. Customized approaches allow insurers to tackle particular business challenges and address specialized opportunities with a focus on the exact competencies that meet the needs of their unique situations. About L&T Infotech L&T Infotech is a fully-owned subsidiary of Larsen & Toubro (L&T), a $14.5B engineering and technology conglomerate that is one of India s oldest and most respected companies. Founded over 75 years ago by two Danish engineers, L&T has built a reputation as a financially sound organization, possessing a strong engineering culture, driven by worldclass process and quality standards, and governed by a values-based management style. L&T Infotech Company Overview Headquartered in Mumbai, India, L&T Infotech operates through 14 delivery centers and 22 sales offices around the globe. With annual revenues of about $850M and over 18,000 employees globally, L&T Infotech is organized along industry verticals and has focused its energies on providing premier technology services to its chosen market. 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 7
With over 3000 associates serving more than 20 leading insurance players globally, the dedicated insurance business unit offers a wide range of IT solutions and services. This unit is the fastest growing vertical within L&T, experiencing a CAGR of over 30% for the last ten years, with over 90% repeat business. AccuRUSI Breadth and Functionality L&T Infotech offers AccuRUSI (Accurate Risk Underwriting through Systems Integration), an underwriting workbench solution that creates a unified work environment for the underwriter. This solution, comprised of customizable components and framework rather than traditional package software, offers insurers business value in a variety of ways: enhanced accuracy in risk selection and pricing; improved underwriting productivity and responsiveness; and greater consistency and control over underwriting processes, risk visualization, and accelerated development. L&T Infotech s goal for the AccuRUSI underwriting workbench solution is to transform the underwriting function by bringing rigor, efficiency, and control to processes by leveraging advances in technology and data availability. L&T Infotech s goal is to transform the underwriting function by bringing rigor, efficiency, and control to processes by leveraging advances in technology and data availability. The solution provides a very strong integration platform and a single, unified workbench that can review and record every detail related to the underwriting process. With AccuRUSI, underwriters save time in gathering data and are able to focus more on analysis and decision-making with the help of automated intelligent alerts and enforcement of controls. AccuRUSI capabilities include: Advanced Risk Analytics Comprehensive assessment of account and risk quality and quantification of risk through scoring engines. Geocoding, hazard data, and mapping of perils. Risk accumulation management for multiple perils, regions, and lines of business. Case profiling and cloning, risk warnings, and streamlined processing for consistent and informed underwriting decision making. Business and operational health check monitoring through performance dashboards. Unified and Productive Work Environment Truly integrated platform for all underwriting processing needs and data analysis. Real-time underwriting enabled by effective task and workflow management with risk alerts and notifications. Seamless extension of the policy administration environment and business processes. Collaboration between underwriters and also with other stakeholders. Automated case prioritization and assignment. Delightful User Experience Tablet-friendly and underwriter-friendly screen design and navigation. Underwriting-centric functional design elements such as SANG (Status, Alert, Notes, and Guidelines). 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 8
Plug-ins for Microsoft Outlook, configurable rules engine, and workflow controls. ACORD-based integration adaptors with core systems. AccuRUSI offers flexible and configurable components that jump-start a customized development cycle for building an advanced underwriting solution. The solution provides prebuilt business capabilities and a platform for technology components. 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 9
Strategy Meets Action Commentary The benefits of next generation underwriting workstations are quantifiable and real. The cost of waiting is high. Now is the time when insurers should be viewing underwriting capabilities with a fresh mindset. It is important to reimagine and rethink what a next generation underwriting workstation is capable of delivering to consider the total business value proposition driving competitive advantage and profitable growth. When, where, and how to start? When? Now, if not yesterday. Where? First, understand what is indeed possible with the offerings available today and look at what will be possible in the not-too-distant future. Then, set priorities and use business terms to describe the capabilities that go on the priority list. It is important to agree on what is most urgent. That agreement is easier to reach when business professionals and IT professionals can have a meaningful conversation. Next, understand and evaluate the solution options. Determine the path that best fits the needs of your organization, and then just get started. And, how to start? For some insurers, particularly those with strong strategic planning organizations in place, it is simply a matter of shifting focus to the possibilities for underwriting. For others, it might help to bring in expertise to articulate the possibilities and connect their value to the unique characteristics and goals of your company. Helpful guidance is available via research and advisory companies, such as SMA, and from service providers that currently offer advanced solutions, such as L&T Infotech. The important thing is to make progress one way or another! Time is of the essence. About Strategy Meets Action Strategy Meets Action (SMA) is dedicated to helping the business of insurance modernize, optimize, and innovate for competitive advantage. Exclusively serving the insurance industry, SMA blends unbiased research findings with expertise and experience to deliver business and technology insights, research, and advice to insurers and IT solution providers. By leveraging best practices from both the management consulting and research advisory disciplines, we take a unique approach offering an unrivaled set of services, including retainers, research, consulting, events, and innovation offerings. This SMA Perspective is a summary of SMA s ongoing research on underwriting and the modernization of legacy environments. L&T Infotech has purchased distribution rights for summary results of selected research and opinion. Additional information on SMA can be found at www.strategymeetsaction.com. Contact the author Deb Smallwood, SMA Founder at 603.770.9090 or dsmallwood@strategymeetsaction.com. 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 10