UN3 Underwriting Today: Modernize

1
UN3 Underwriting Today Modernize
OptimizeTuesday, November 11th, 1030 1145
2

• Jennifer Overhulse-King, Principal Owner St.
  Nick Media Services
• Jennifer Overhulse-King is a writer, as well as a
  marketing and public relations expert, with an
  extensive journalism background and specific
  insurance industry expertise. She has over 15
  years of writing and editing experience and has
  been published in print and web publications such
  as The Stars Stripes, The Louisville Business
  Courier, The Kentucky Post, The Dixie News, The
  Encyclopedia of Sculpture, Suite 101, Book
  Magazine, Insurance Technology, Tech Decisions,
  Bests Review, National Underwriter, Insurance
  Networking News, ATTs Networking Exchange,
  IASAs Interpreter and the Journal of Insurance
  Operations. Jennifer is a member of the Insurance
  Marketing Communications Association (IMCA), the
  Insurance Accounting Systems Association (IASA)
  and is editor of IASAs Interpreter.

3

• Moderator
• Jennifer Overhulse-King, Principal Owner St.
  Nick Media Services
• Todays Speakers
• Karen Furtado, Insurance Practice Director
  Collaborative Consulting
• Ed Gray, Director of Customer Solutions
  FirstBest Systems, Inc.

4

• Housekeeping items
• Turn off cell phones, beepers, pagers, etc.
• Please fill out the survey
• Moderated QA at the end of the session save
  your questions
• Topic introduction Underwriting Today
  Modernize Optimize
• Hot Topics
• Peter Drucker
• And now, our first speaker of the day, Karen
  Furtado of Collaborative Consulting.

5

• Karen Furtado, Insurance Practice Director
  Collaborative Consulting
• Karen Furtado is the insurance practice director
  for Collaborative Consultings national practice.
  She has more than 25 years of technical and
  business experience within the insurance
  industry. Her specific areas of expertise include
  application development, complex system
  implementations, vendor selection processes and
  technical, project management and business
  process outsourcing (BPO). Throughout her career,
  she has focused on delivering high value
  solutions for the cores issues facing insurance
  carriers. She can thoroughly assess clients
  needs and provide proven options for efficiently
  resolving business issues.

6

• Underwriting Today

7
Todays Industry

• Irrationally Soft Market
• Maintain/grow premium while rates exposures
  shrink
• Increased submission and policy counts
• Declining policy retention
• Flat or reduced underwriting staff
• Agent ease-of-doing-business (aka fewer
  questions)
• Improved underwriting quality and discipline
• Pricing pressure

8
Todays Challenges

• Soft market Falling premiums
• Antiquated technology Agents shopping
  around
• Increasing book of business Improving
  quality of book
• Lower loss ratios Competitive price pressures
• Better match premium to risk Need to get
  product out faster
• Retiring baby boomers Deploying rules
  consistently
• Where to hire / how to train new underwriters
• Capturing underwriting expertise Creating
  differentiation
• Making it easier for agents to work with you

8
9
Carriers Speak Out

• In a recent Ward Group survey of commercial
  carrier CEOs, 85 believed technology investment
  can play significant or more than average role in
  companies ability to compete.

• Expected Benefits of Investment
• Improved underwriting productivity, reduced
  underwriting expense
• Reduced loss ratio
• Ease of doing business
• Better individual risk selection and pricing
• Better understanding of entire book of business
• Meet expectations of agents and employees

• In Their Own Words
• If agents have to rekey with us, they will
  place business elsewhere
• Quickly understand at what price level a risk
  can be written and still make a profit.
• Automated underwriting rules will speed up
  policy processing and shorten turnaround times.
• Technology can differentiate a company from
  competitors

10
Carriers Speak Out

• Magic Wand Survey
• Increased Efficiency and Productivity
• Speed Agility (tied)
• Ease of Use for Underwriters (tied)
• Ease of Doing Business with Agents

• In Their Own Words
• We want increased premium capacity with the
  same number of staff, for profitable growth.
• I want to reduce the number of people handling
  a submission and cut down on the back-and-forth
  questions between underwriters and agents.
• We want to improve the customer experience.
• The ideal system would allow our agents to
  interact with our associates and view the system
  together. This would allow us to provide better
  service.

11
Carriers Speak Out

• Phelon Group survey of mid-tier carrier CEOs
• Major concern is how to get profitable business
  on the books in soft market
• Current underwriting processes are inefficient,
  constrained by legacy systems, but contain
  critical underwriting rules.

• Underwriting Priorities
• Improve ease of doing business with agents
• Automation of underwriting
• Straight-thru processing
• Integration with predictive analytics system
• Management visibility
• Sharing of best practices

• In Their Own Words
• Getting business and pricing properly with
  respect to risk is my main concern.
  Profitability is key.
• We operate in a highly competitive market and
  need to make it easier to work with our agents.
• Our legacy systems create huge inefficiencies.
• We need better tools.

12
Agents Speak Out

• Pros
• Technology can differentiate a company from
  competitors
• Outstanding service by all personnel. Their
  website is very easy to navigate. Download of
  endorsements is wonderful.
• Best company in our office. Terrific
  computerization.

• Cons
• System is very outdated and hard to use, lots of
  issues.
• Has the most difficult automated system to work
  with that we have in our office. Very time
  consuming and difficult to follow.
• Nice people, no technology.
• Was our leading company, but have slipped
  because they are slow to update their technology
  and are not user friendly.

13
What Carriers/Agents Want

• Significant improvement in underwriting
  productivity
• Handle increased submission volume with current
  staff
• Provide first best offer to improve hit and
  retention ratios
• Agent ease-of-doing-business
• Rather than just abandoning questions/discipline,
  offer value thru the most efficient and
  responsive process (carrier of choice)
• Precision pricing most informed, most accurate
• Incorporate web data and predictive analytics as
  actionable data
• Help underwriters analyze and price risks at most
  granular level with best information
• Maintain / improve underwriting quality and
  discipline
• Assist underwriter with best practices and
  authority guidance based on best information
• Maintain / grow premium in face of shrinking
  rates and exposures
• Handle greater volume at same expense level
• Precision pricing

14
Constraints

• Traditional internal workflow steps, roles,
  handoffs
• Underwriting process is not just an extension of
  policy administration
• Submission processing is a qualitatively
  different process
• Policy administration solutions leave you on your
  own for that.
• Agent portals have provided some improvements
• Get electronic application, maybe quick quote
• But still need follow-up info, reconciling portal
  quote to production, essentially manually-driven
  process

15
Symptoms of Sub-Optimal Workflow

• Re-entry of data
• Handoffs
• Delays / backlogs
• Clerical work
• How do you get info? If its not at your
  fingertips
• Elapsed time greater than professional person-time

16

• Top Workflow Donts
• Tracking sheets
• Typing in data from a paper or from one system to
  the other
• Waiting for a paper file to be pulled or received
• Having to close one submission in the system to
  be able to access another
• Re-typing data into another system (e.g., loss
  control, loss history, credit, MVR, VIN
  validation, etc.)
• Searching through the Underwriting Manual or old
  emails to find that company directive on writing
  xxx LOB in yyy territory
• Agent entering 5 screens of data only to find out
  you dont write that limit for that class in that
  state
• Waiting two hours for an agent/underwriter to get
  back in the office to respond
• Losing the account because someone misplaced the
  submission paperwork
• Collecting information, printouts, separate
  documents, and the underwriters notes to pass it
  on to the referral underwriter
• Reconciling your agent portal quote with your
  backend rating quote
• Finding out six months later that an
  agent/underwriter shouldnt have quoted that
  account because it was outside your appetite or
  their authority level

17
So How Do we Start to See the Bigger Picture?
18

• If you have questions specifically regarding this
  portion of the presentation, please contact
• Karen Furtado, Insurance Practice Director
• Collaborative Consulting
• 70 Blanchard Road, Suite 500
• Burlington, MA 01803
• [phone]
• Email kfurtado_at_collaborative.com
• And now, our next speaker, Ed Gray of FirstBest
  Systems.

19

• Ed Gray, Director of Customer Solutions
  FirstBest Systems
• Ed Gray has over twenty-five years of insurance
  expertise in Information Technology and Business
  Operations with carriers and brokers, including
  roles as CIO, COO, and Senior Vice President of
  Operations.
• Ed has extensive hands-on experience in system
  and business process architecture and
  re-engineering in policy administration, claims,
  billing, reinsurance, accounting, and management
  reporting areas, so he has seen what does (and
  doesnt) deliver real value to the insurance
  organization.
• At FirstBest, Ed works with customers and the
  product team to develop a shared vision for how
  the Underwriting Management System can bring
  real-world productivity and quality benefits to
  the carriers internal and agency operations.

20

• Tracking How Far Weve Come
• Submission tracking discussion (echoes of the
  80s)
• At what point do we start measuring submission
  processing?
• Mail/fax room? Assistants desk?
  Underwriters desk?
• Weve automated steps, but essentially have same
  workflow
• Still assembly line, handoffs, islands of
  automation, re-entry
• We have spent Ms to pave the cowpaths

21

• Tracking How Far Weve Come (contd)
• How has the paved cowpath helped? Are we there
  yet?
• How long does it take?
• Is underwriters time optimized?
• How flexible and agile are you?
• The tracking question is the wrong question
• Were tracking the assembly line
• measuring our bottlenecks instead of
  eliminating them
• Instead of
• From what point do I measure?
• should be
• How do I get a complete app to underwriter
  immediately and analyze it and
  produce a quality quote in MINUTES?

22

• Todays Emerging Technologies

Todays Emerg-ED Technologies
23

• Emerg-ED Technologies
• SOA
• Web 2.0
• Configurability
• Rules Workflow Engines

24

• Service-Oriented Architecture (SOA)
• SOA treats application functions as discrete
  services
• Service is a building block, like a Lego block
• Business applications are assembled from
  appropriate services
• Note Retrofitting existing applications into
  SOA is challenging.
• SOA is clearly the best practice now
• SOA applications are more flexible, extensible,
  and sustainable
• All new applications should be SOA-compliant,
• whether built in-house or acquired from solution
  providers

25

• Web 2.0 / Rich Internet Applications
• Technologies and methods that bring interactivity
  and real-time behavior into web systems (chat,
  social-networking, photo/video/voice, blogs,
  wikis)
• Technical capabilities themselves arent new
• but the widespread acceptance to using them in
  applications
• YouTube, Facebook, dating services, and even the
  NBC Olympics website
• So, what can Web 2.0 do for you?
• New options for how we do business (collaborate
  with your agent real-time)
• Agent and underwriter productivity
• Greater responsiveness
• Strengthened agency relationships
• All retained within the file for sharing and
  audit trail

26

• Configurability
• Specify details of system without touching
  underlying base code
• Past
• Programmers redefine a few fields or a control
  table
• Programmed configurability was state-of-the-art
  in the 1980s
• Today
• You can configure virtually all aspects of your
  process
• Data, values, screens, screenflow, edits / rules,
  STP criteria, UW guidelines, referrals, letter of
  authority, service execution
• Point-and-click tools can be used by business
  system analysts or developers
• Configurability is another best practice to
  insist on
• But make sure you get to see and try it
• everyone says they are configurable, but what
  they actually offer varies widely

27

• Rules Workflow Engines
• Define business rules / processes separate from
  the systems data and screen handling
• Change rule / process without changing code
• Enable management and re-use of rules
• Evolution from programmed to configured rules /
  workflows
• Originally, rules hard-coded into application
  programs
• Then, external rules and workflow engines
• (Separate rules logic, but still programmed
  integration)
• Now, embedded rules and workflow configuration
• (Apply rule at any level of process without
  overhead of integration)
• Configurable, embedded rules/workflow deliver
  better results

28

• So What??
• Its cool technology
• SOA provides the flexibility of Lego blocks
• Web 2.0 lets you collaborate real-time
• Configuration lets you point-and-click to change
  your application / process
• Embedded rules / workflow engines manage and
  re-use rules / processes
• But what can they do for real business people and
  processes?
• Bring us a coherent, efficient underwriting
  process?
• Improve productivity and quality for the
  underwriter and the agent?
• Can they really improve things?
• What can the modern process be like?

29

• Re-Imagine Your Process
• Put aside all the things youve been told you
  cant have
• Magic Wand exercise
• Take a fresh perspective
• Look outside the industry.
• What are Amazon, Fidelity, eBay, Progressive, and
  other companies doing?
• What features do you like that you could
  re-apply?
• Can you think of other examples?

30

• Workflow Dos
• Everything you need to see for an account in one
  place
• Everything in 1-3 clicks everything!
• Everything is accessed and updated real-time
• Everyone is notified of everything relevant,
  immediately
• Underwriters agents can work with each other,
  not at each other, in one process
• Multiple accounts open at once (a click away)
• Straight-thru processing for the clear winners
  and losers and, for the rest, everything set up
  in one desktop for the underwriter
• Automatic advice for the underwriter based on
  data, models, activity,
• Intuitive, easy-to-learn, easy-to-use
• No re-entry ever
• Configurability to keep the system current with
  business needs and opportunities

31

• Assembly Line or Knowledge Worker
• Assembly Line Approach
• Originated to relieve underwriter of clerical
  tasks
• By definition, it builds in extra handoffs,
  communication, delays
• Increasingly, those clerical tasks can be
  automated, especially with rule-driven workflows
  and web information services
• Knowledge Worker Approach
• Everything at your fingertips
• All preparatory clerical work and data
  acquisition done
• Rule-driven advice and analyses available
• High-level functions can run real-time at your
  direction
• One-stop, one time, once-and-done, real-time
  processing

32

• We Call This Underwriting 2.0
• First step is realizing the business process you
  want
• Underwriter desktop / control station with access
  to everything
• Setup tasks done automatically
• Underwriter can analyze, research, rate, price,
  quote, refer, bind
• All other systems and web services available in a
  few clicks
• Communication / collaboration is instantaneous
  and saved in account
• Agent has upload, easy entry, STP quote / bind as
  authorized
• Intuitive and easy to use
• Everything can be configured to change, add to,
  redirect at the speed-of-market
• This is all possible today
• Technologies are available
• People are doing it (not always in insurance)
• It doesnt take 10Ms and years of waiting

33

• Submission Entry
• Agent upload or agent entry from scratch
• Prequalification / knock-out questions up front
• Agent completes submission (over and above what
  AMS has)
• Agent submits, immediately notified of receipt /
  assignment
• Straight-through processing (STP) for flow
  business available (see next)

• Value to Carrier
• Complete application, (incl. supplemental data,
  attachments, w/in risk appetite)

• Value to Agent
• Upload, prequalification, easy entry, immediate
  alert of receipt and assignment
• Fastest entry / response, least agent expense ?
  carrier of choice

34

• Straight-Through Processing (STP)
• Agent can quote and bind flow business in minutes
  
• (within authority and rules)
• Quote with production rating engine
• Bind based on configured subject-tos
• Carrier has visibility, access, and audit trail

• Value to Carrier
• Real-time STP capability based on production
  rating
• Underwriters can step in at any time (to assist,
  collaborate, or take over)

• Value to Agent
• Real-time STP that leverages the screens and
  processes they already know

35

• Account Preparation
• System prepares the account for knowledge
  worker underwriter

• Clearance
• External data/web reports
• Predictive analytics results

• Underwriting and rating worksheet prefilled
• Advisory alerts

• Ready to rate, price, and quote real-time

• Value to Carrier
• Clear winners and losers already processed
• Best info and analyses at underwriters
  fingertips
• Underwriter still has control to apply judgment

• Value to Agent
• Account reaches underwriter ASAP, set up for
  carriers best answer

36

• Underwriting Analysis, Rating, Pricing
• Underwriter focuses on underwriting
• All information and tools at fingertips
• Real-time rating and pricing
• Collaboration agent or other underwriters
• System retains audit trail of all activity

• Value to Carrier
• Underwriter focuses on underwriting
• Real-time rating
• Automated assistance and rules while allowing
  underwriting judgment

• Value to Agent
• Account gets underwriters full attention
• Agent gets carriers best answer ASAP

37

• Referral Processing
• Referral per underwriters electronic letter of
  authority
• Refer account with a simple click and note
• Referral underwriter has separate referral queue
• Entire account and collaboration tools at
  fingertips
• Audit trail of all activity

• Value to Carrier
• Full account at referral underwriters fingertips
  improves quality of review
• Streamlined process saves person-time and speeds
  turnaround time

• Value to Agent
• Agent get carriers best answer ASAP

38

• Quote Options Proposals
• Real-time generation of quote proposals
• One or more proposals, each with one or more
  options
• Configurable cover letter and quote
• Attachments from rating engine or other
• Instant delivery to agent desktop
• Email with attached quote
• Download to agents AMS

• Value to Agent
• Quality quote documents in minutes

• Value to Carrier
• Quality quote documents in minutes

39

• Quote Response Changes
• Underwriter agent collaborate to get to best
  answer real-time
• Collaboration through chat, notes, shared
  view/update
• Modify quote or new quote in minutes (unlimited
  iterations)
• System retains audit trail of all activity

• Value to Agent
• Get to the best answer quickly
• Collaborative process with underwriter

• Value to Carrier
• Resolve in minutes what took hours or days before
• Collaboration with agent builds win-win
  relationship ? Succeed together

40

• Binding
• Real-time binding
• Bind request / binding in real-time
• Configurable bind letter (with attachments)
• Post-bind changes supported (controlled)
• Instant delivery to agent desktop
• Email with attached quote
• Download to agents AMS

• Value to Agent
• Closing the business real-time with
  customer-presentable binder

• Value to Carrier
• Closing the business real-time

41

• Policy Issuance
• Issue Policy
• Initiate issuance from underwriter desktop
• Policy Issuance delivers policy document PDF
• (including state forms, attachments, all
  copysets)
• Underwriter / agent desktops updated with PDF

• Value to Agent
• Policy can be delivered in as little as a day

• Value to Carrier
• Policy can be completed and delivered in as
  little as a day

42

• Endorsement Processing
• Agent and underwriter collaborate to process
  changes
• (mid-term endorsements, incl. out-of-sequence,
  cancels / rewrites)
• Use external data / web reports, production
  rating / issuance
• Referral and collaboration as needed
• Complete change real-time and deliver results
  instantly

• Value to Agent
• Agent productivity customer service delivery

• Value to Carrier
• Complete changes in one process on one desktop
• Underwriter productivity agent service delivery

43

• Renewal Processing
• System initiates automated or manual renewal
• Manual renewal submission (incl. automated prep)
• Generates renewal quote (if within rules)
• Generates renewal binder solicitation (if within
  rules)
• Provides non-renewal criteria, flags, and notices
  

• Value to Carrier
• Renewal initiation
• Renewal quote / binder for good business
• Non-renewal notice for questionable business

• Value to Agent
• Facilitate initiation of renewal business to
  encourage retention

44

• Workflow Dos
• Everything you need to see for an account in one
  place
• Everything in 1-3 clicks everything!
• Everything is accessed and updated real-time
• Everyone is notified of everything relevant,
  immediately
• Underwriters agents can work with each other,
  not at each other, in one process
• Multiple accounts open at once (a click away)
• Straight-thru processing for the clear winners
  and losers and, for the rest, everything set up
  in one desktop for the underwriter
• Automatic advice for the underwriter based on
  data, models, activity,
• Intuitive, easy-to-learn, easy-to-use
• No re-entry ever
• Configurability to keep the system current with
  business needs and opportunities

- How did we do?
45
- How did we do?

• What Carriers Want
• Significant improvement in underwriting
  productivity
• Handle increased submission volume with current
  staff
• Provide first best offer to improve hit and
  retention ratios
• Agent ease-of-doing-business
• Rather than just abandoning questions/discipline,
  offer value thru the most efficient and
  responsive process (carrier of choice)
• Precision pricing most informed, most accurate
• Incorporate web data and predictive analytics as
  actionable data
• Help underwriters analyze and price risks at most
  granular level with best information
• Maintain / improve underwriting quality and
  discipline
• Assist underwriter with best practices and
  authority guidance based on best information
• Maintain / grow premium in face of shrinking
  rates and exposures
• Handle greater volume at same expense level
• Precision pricing

46

• The Dead Horse
• Dakota tribal wisdom says
• When you discover youre riding a dead horse,
• the best strategy is to dismount.
• In business, we often try other strategies
• Changing riders
• Saying This is the way weve always ridden this
  horse
• Appointing a committee to study the dead horse
• Visiting other sites to see how they ride dead
  horses
• Appointing a tiger team to revive the dead
  horse
• Comparing the state of dead horses in todays
  environment
• Hiring contractors to ride the dead horse
• Purchasing a product to make dead horses run
  faster
• Harnessing several dead horses together for
  increased speed
• Revisiting the performance requirements for dead
  horses

47
Modernize Optimize Start Transforming Now!

• Get Going!
• Recognize your own current deficiencies and
  limitations
• (if not sure, ask your employees, your
  agents)

48
Agents Speak Out

• Technology can differentiate a company from
  competitors
• Outstanding service by all personnel. Their
  website is very easy to navigate. Download of
  endorsements is wonderful.
• System is very outdated and hard to use, lots of
  issues.
• Best company in our office. Terrific
  computerization.
• Has the most difficult automated system to work
  with that we have in our office. Very time
  consuming and difficult to follow.
• Nice people, no technology.
• Was our leading company, but have slipped
  because they are slow to update their technology
  and are not user friendly.

49
Modernize Optimize Start Transforming Now!

• Get Going!
• Recognize your own current deficiencies and
  limitations
• (if not sure, ask your employees, your
  agents)
• Envision / magic wand
• Find someone who can help you
• Get inspiration / ideas, experience, skillsets,
  partnering
• Could be solution provider (vendor), consultant,
  industry partner

50

• Call to Action
• Get going
• Stop wasting time and money
• Invest in future (Have to keep present working,
  but the future is key)
• Dont replace your legacy system with mine
• Best time to transform is when it will leapfrog
  your competition,
• not just to keep pace or catch up

51

• If you have questions specifically regarding this
  portion of the presentation, please contact
• Ed Gray, Director of Customer Solutions
• FirstBest Systems, Inc.
• [phone]
• Email egray_at_firstbest.com
• And now, back to our moderator, Jennifer King,
  for the QA portion of our program.

52

• QA with Todays Presenters
• Moderator
• Jennifer Overhulse-King, Principal Owner St.
  Nick Media Services
• Speakers
• Karen Furtado, Insurance Practice Director
  Collaborative Consulting
• Ed Gray, Director of Customer Solutions
  FirstBest Systems, Inc.

53
We hope you enjoyed the session. For
additional questions or comments contact

• Jennifer Overhulse-King
• Principal Owner
• St. Nick Media Services
• [phone]
• jen_at_stnickmedia.com

Karen Furtado Insurance Practice
Director Collaborative Consulting (781)
565-2600 kfurtado_at_collaborativeconsulting.com
Ed Gray Director of Customer Solutions FirstBest
Systems, Inc. [phone] egray_at_firstbest.com
To receive copy of this presentation, please
contact Mariana Felisberto FirstBest Systems,
Inc. 781-863-6027 or mfelisberto_at_firstbest.com