Transcending market cycles: new technologies can help carriers with the underwriting process, thus freeing underwriters to pursue profitable growth and control risk exposure.

Underwriting organizations are plagued by poor quality of captured data, lack of a collaborative work environment and an unstructured approach to the underwriting process, all of which inhibit underwriters' ability to effectively select, price and service risk. The resulting leakage can erode the potential value of every dollar of profit by as much as 25% to 30%.

Enhancing the underwriting process through greater use of automation and process management can yield several loss-cost, expense and growth benefits through improved data quality, quicker problem identification, prioritized work management and better account handling.

Carriers are preoccupied with the opportunities offered by today's hard market to recover from years of price erosion and liberal underwriting practices. But they should focus beyond this temporary cycle. New technologies can help carriers bring greater structure, discipline and efficiency to underwriting, thus transforming underwriting behavior and freeing underwriters to pursue profitable growth and control risk exposure.

For personal lines and small commercial accounts, technology can help automate underwriting decisions beyond simple yes/no knockout rules. A full spectrum of rules can be executed for risk selection and pricing decisions, including scoring and complex pattern analysis (dynamically assessing combinations of attributes) by risk appetite. Automating more decisions with greater precision will cause fewer exceptions and referrals to fall out of the system and, most importantly, provide greater assurance that risk pricing aligns well with risk quality.

Even for larger commercial accounts, the decision process can be enhanced by automating routine tasks such as documenting files, collecting information, completing forms and ordering reports. Automation permits underwriters to focus on activities such as managing producers and channels, evaluating risks, pricing, negotiating and collaborating for better account management.

Technology can also help capture internal data by harnessing the explosion of external data on industry, jurisdiction, climate, geography and other attributes that correlate to risk. With more timely, robust and diverse data, insurers likely will have greater data integrity that will enhance their ability to clearly define their risk appetites, execute automated rules and leverage information more productively.

Six technology-driven capabilities that can help improve underwriting results include:

* Integrated Account File: As the repository for all information and activity relevant to an account, an electronic integrated account file makes it easier for underwriters to find the data and documents they need as they collaborate throughout the underwriting process.

* Risk Segmentation: For commercial lines, finely segmenting risks within industry Standard Industrial Classification codes, lines of business and regions enables carriers to more closely--and profitably--align coverage, pricing, terms and conditions and servicing to specific risks. For personal lines, capturing more granular data across a set of policyholders reveals patterns of risk that correlate to more precise risk segments and enables a greater understanding of loss predictors.

* Rules-Based Workflow: New solutions that provide underwriters with the ability to better manage, view and report on tasks and cases will empower them to make better decisions. A rules-based process, for example, generates tasks according to data and account-status changes to the appropriate underwriting team member at the right time, linked to tools needed to complete the task.

* Data Aggregation: Streamlining data collection with third-party providers through electronification can enhance underwriting results. An example is a rules-driven process that automates collection of internal and external data and the ordering of reports, ensuring the consistency and completeness of information used by underwriters and rules engines to make decisions.

* Customer/Producer Collaboration: Creating portal access through extranets that connect customers and producers to appropriate portions of the account file enables self-service, thus freeing the underwriting team from duplicate data collection and data entry.

* Performance Management Reporting: Performance is analyzed by account, portfolio, underwriter, producer and risk segments, creating a feedback loop for continually refining risk segments, risk appetites, decision rules and best practices processing.

Building greater efficiency and effectiveness into the underwriting process will position carriers to sustain results through market cycles and achieve a competitive advantage.

David P. Hollander, left, is a managing partner and Gail E. McGiffin is an associate partner with Accenture. They can be reached at [e-mail].