Commercial Insurance Underwriting Business Process As Is Current State Diagrams and Challenges

1

P&C Commercial Underwriting: As Is State Business Challenges

• Underwriters are distracted from core underwriting by non-core activities, account maintenance tasks, and manual processes. Lead UW spends most of the day at desk manually processing submissions & renewals.

• Sr. level Underwriters desire to spend more time in the field, building agent relationships, marketing and portfolio offerings.

• An unstructured decision support model allows for highly subjective underwriter decisioning versus disciplined. • Manual case/underwriting model vs. a balance between automated straight through processing.• Significant UW audit risks because audit information is documented on sticky notes placed on folders for later

referencing.

• DOS rating application• Weak system capabilities.

• Duplication of account management information is not prevented in the current system and has lead to embarrassing multiple quote accepted responses from multiple Uws with varying quote price responses.

• Lack of capabilities for pre-qualification / quick decline increases time and risks decreases data quality

• Lack of data driven insights – no underwriting performance management and measurement approach prevents key insights around productivity, internal and external partner servicing, compliance, activity based costing, corporate leakage, etc.

• Rekeying of same information occurs multiple times throughout the UW Lifecycle• No system supported workflow management tool• No BI or data visualization tools – only a pivot reporting service

• Submission and work intake processes are not consistent; different intake formats (Producers submit information differently and with varying quality in their support documentation)

• Inaccurate or incomplete data being sent from Producers sending submissions and requesting quotes.• Significant time is spent in collecting and waiting for case data from Producers, external parties (ex. Loss reports) and

internal operations teams – ex. Product Operations, Marketing, Claims - (missing info, ordering docs, etc.)

1. Inefficient Underwriting Operating Model

4. Antequated Systems & Capabilities

2. Incomplete and Inaccurate Intake Data

• Paperwork piles drive the underwriting teams’ monthly work queue activities vs. a workflow management system. This causes heavy backlogs in their analyses and needed paperwork follow ups, among others.

• Work intake to policy issue is not a streamlined process which impacts processing time and productivity loss.• Manual workflow management challenges task routing, task sharing and handling capabilities and increases the

amount of interactions among hand off points and servicing partners.

3. Disorganized Manual Workflows

Challenge Description

2

• Risk selection, modeling and management capabilities are subjective and not through analytics and comprehensive data inputs. UW’s gut reactions based on experience and comfort levels with limited, select

lines of business.

• No tools to allow for the use of spatial and geolocation data and its characteristics for enhanced exposure management. This constrains risk management, especially for property portfolio offerings.

• The UWs are unable to conduct advanced data mining and predictive modeling because of their DOS system’s shortcomings. This confines their risk segmentation insights and pricing accuracy which leads to major segmentation issues. The UWs find themselves writing mostly lines of business they are comfortable with and not ones they can offer but don’t know enough about.

• Limiting the LOB submissions approvals to a select LOB or few, challenges both revenue and the UW company’s brand because of the notoriety of LOB expertise. This demotivates Producers to submit specifically to them and instead they send simultaneous submissions to shop around.

• The UWs are also not relying on internal information sources – instead they mine competitor applications to find subjective factors to apply to their pricing calculations.

• They are also applying a DOS rating tool workaround when pricing results exceed their UW Authority limits.

5. Lack of Data Driven Risk Management

6. Absence of Location & Exposure Management

7. Restricted Pricing Accuracy

• Producer engagement is hindered because of the lack of streamlined data collection processes. The Underwriters and Underwriter Assistants don’t have system oriented means of providing regular updates / alerts to the Producers or the Producers staff. This results in poor customer service and turn around times.

• The UWs are in a remote location which confines them to not being able to see their Producer partners in person as often as they need to in order to foster strong relationships.

Additional Challenges Description

8. Challenged Agent Collaboration

• Inability to leverage mobile devices, unified collaboration technologies or user portals for data collection and real-time assessment of activities such as risk profiling due to legacy system restrictions

• Productivity hampered for underwriters because of lack of innovative technology capabilities• UW analyses such as UW worksheets for reinsurance audits are the conduits for storing and capturing

pertinent account/policy information

9. NonExistent Mobility or CRM tools

P&C Commercial Underwriting: As Is State Business Challenges

3

Risk

Selection

PricingRating

Issuance

Commercial Underwriter Team Processes (As Is)

1. Intake process: Jeff and Lucy, Underwriter partners, receive Producer submissions with requests to quote in their Outlook inbox.

7) Quote Through Bind processes:

7a) If, after 30 days, no Request to Bind response is received by the Producer, the Uws close the quote in the DOS UW rating tool and add all correspondence into an account, non renewed folder to be filed away for future referencing.

2) Appetite and Segmentation Management processes:

2a) Jeff or Lucy determine whether to quote by using a DOS UW rating tool to subjectively consider with limited info. their: appetite for risk, pricing scenarios, and assess whether business for this account has already been quoted for another Producer or for the same Producer previously.

DOS Underwriting Rating Tool

start

React Manage Support Learn

Serve

If Yes, the Submission to Rate process begins.

If No, they prepare a form-based email and send a decline to Quote response to the Producer

2b) If another active submission for a different Producer is found, they send a response back to the Producer indicating that s/he needs a broker of record letter to receive a quote to ensure that they don’t accidentally quote a competing Producer a different price.

4) Document Management processes:

4a) Yes submission cases are printed and placed into an organized stack of papers for the Underwriting team (incl. an Underwriter Assistant) to manage their monthly work queue activities.

4b) A Producer notice is sent advising s/he will receive a quote in 30 days.

5) Quote Response Packaging processes:

5a) The UWs input narrow rating criteria into the rating tool to get the base rate and apply factors, discounts, credits to develop the premium

5b) If the UW does not have UW Authority, Joe, the UW Director, is sent an approval request. If received, the Rate to Quote process begins.

3) Submission to Rate processes: Otherwise, 2 decision courses::

6) Rate to Quote processes:

6a) The UWs search for writing company quote templates in their directories and re-keys required info for the account and Producer, tweaks additional info, reopens the Producer

submission email and adds, attachments andcustomizes the response and replies.

6b) The Producer Quote response email is printed and added to a stack of quotes awaiting a response that remain valid for 30 days.

7b) If a Producer response is received, the Uws begin Negotiating on coverage terms, price, etc.

7c) If manuscript endorsements are added, a sub-process of approval with Legal and the Uws’ superiors is required.

7d) A binder document (pdf) is provided to the Producer via email to provide to the customer. It is an assurance that the insured has a guarantee of coverage for a set period of time while the Insurer/Uws wait on receiving subjectivity proof of compliance from the insured.

7e) UW prepares an Invoice from their Guidewire billing system

7f) Uws rekey information into an Excel file used for reporting, auditing purposes. Along with creating & stacking a bind file folder for tracking awaiting subjectivities paperwork.

Guidewire Billing System

8) Bind to Issuance processes

8a) Once subjectivity info. Is received, it’s filed in the bind folder and the UW composes an UW worksheet for auditors. Simultaneously the UWA prepares the policy documents while all wait for subjectivity proof s.

8b) Policy documents & attachments sent to the Producer and materials are updated & filed away until renewal time.

End

4

Flow of Underwriting Submission to Rate/Quote to Bind to Policy Issuance processes

Policy Applications Received From Producers (via Outlook)

Underwriter Reviews Submission/Request for Quote

Need Additional

Information?

Obtain and Review Additional Information Preferred or

Standard Risk?

Yes No

NoYes

Approve Submission w/preferred or standard risk

Insurable at Substandard

Rate?

Approve submission with Substandard Rating

Send Packaged Quote to Producer requesting Bind Response

Policy Becomes Issued

Producer provides Binder document and Billing Invoice to Customer

Customer Accepts

Rated Policy?

No Policy In Force

Decline Submission/Application (a form based email response)

No

Yes

Yes

START

END

Send note to Producer that they’ll receive a quote response in 30 days

Insurer Sends Binder Document & Invoice to Producer

1. Intake Process

2. Appetite and Segmentation Management Process

3. Submission to Rate Process

Above UW’s Authority Limits?

Yes

Obtain Director Approval

No

Active Submission for a

different Producer found?

YesNo

Note Sent to Producer requesting Broker of Record letter-to be able to quote

6. Rate to Quote Process

No

YesNo

Broker of Record Letter

Received?

Broker Request to Bind

Received?

Customer Subjectivities

Docs Received ?

YesNo

YesNo

4. Document Management Process

5. Quote PackagingProcess

7. Quote through Bind Process

8. Bind through Issuance Process

5

Intake Process (As-Is)

Underwriter

Customer

END

NoYes

Apps involved – Email: Outlook Inbox

3. Reviews Submissions/Renewa

ls/Policy Changes

7. Awaits Insurer

Decision

AddtnlInfo

needed?

START1a. Customer

requests a new insurance

quote

Producer 2a. Sends mass emails to his/her list of available companies based on the market of the insured to see who is

willing to write a policy for the customer and gain a ballpark price

1b. Customer requests to renew

their existing policy (renewal)

6. Awaits UW Decision

4. UW reaches out to Producer/Producer’s staff

to obtain needed info AddtnlInfo

received?

Yes No

Appetite and Segmentation Management Process for UW to determine whether or not to quote

5. UW Logs Producer

Request made but not quoted

Agreed SLAs?

Actual UW productivity:~5 policy changes (if any) p/day. 10 to 25% of policies are updated annually.~ 25 submissions a day, instantly declining 60% and processing 40% to quote – mostly title business; however, would like to broaden their market segment and lift their reputation for being able to write other classes of business. The UW binding ratio from quote is roughly 25% which is 4% from submission to bind.

Agreed SLAs?

1c. Customer requests a

policy change

2b. Sends email to UW to advise

of Policy Change

They hope over time to develop an understanding of who the good brokers are and who continually send terrible business. This will help the UWs prioritize their work for quality brokers and ignore submissions from those that do not send good business.

Each submission arrives with varying degrees of detail and information.The Insurance company doesn't have enough influence to force a pattern on the various Producers or require them to fill in their carrier application up front

6

Appetite and Segmentation Management processes (As Is):

Underwriter

START

Does quote fit into insurer’s Target

market and size?END

No

Yes

No

Yes

1. Determine whether or not

to bother quoting

4. Send Request to Producer to

Obtain a Broker of Record Letter

2. Check customer account and Producer

details in DOS UW Rating Tool

If the Insurer’s UW decides to quote, the Producer receives an email alerting them of a 30 day

window to respond

Broker of Record Letter

Received?

Is their another active submission for a different

Producer?

DOS Underwriting Rating Tool

Additional future business from the Producer is

usually lost when this happens because of

paperwork & response times which can cost the

Producer the sale

Has any UW from the Co. already quoted

business for the customer account for another Producer or for the current Producer?

Multiple monitors involvedOne monitor typically to manage the active software used for the current submission. Second monitor for reading their inboxes and files.

Involves manually analyzing ungrouped system records to assess whether duplicate quote responses are a risk

5. Decline Submission

Yes

No

Submission to Rate Process

Limited decision data for whether to write the business or not include:-A confined subset of hazard codes, ex.title insurance companies or architects.-The number of the customer’s prior claims.-A combination of revenue and the prior year’s insurance premium to see if the UW thinks s/he can offer a better price

A manually composed form-based email response

3. Manually sift through system records, stacks of papers to assess prior actions

Yes

No

6. UW prints submission & places into a paper based

work queue stack

7. Manual email is composed to advise Producer s/he will receive a quote response in 30 days

Producer

Risk

SelectionPricing

RatingIssuance

UW applies Risk Appetite, Risk Eligibility, Knock Out Rules. Considers: target market, target size and prior submissions from previous producers/brokers

Risk of different UWs sending varying quotes to the same Producer is high because the DOS rating application doesn’t allow for grouping submissions

from same accounts together

This ensures that the UW doesn't accidentally quote a competing broker a different price

7

Submission to Rate and Document Management processes (As Is):

START

Need higher UW Authority to go

outside approved price to match

market? ENDNo

Yes

1 Pull a “Yes” submission that the Insurance Co. is willing to write from out of this month's

Underwriting team’s work queue paperwork pile

2. Key in rating information into 2 screens from the DOS rating application

Quote Response Packaging and Rate to Quote Processes begin

Limited submission to rate decision data inputs include:-Only a few key criteria used for rating: typically the amount of revenue and classification will determine the base rate. -Afterward a series of factors apply based on prior acts, retroactive coverage and years in business. -Roughly 5 to 7 subjective factors, debits and credits the UWs can apply in order to develop the premium to a price they believes will fit the market and the risk. This type of data is typically found by the UWs on competitor’s applications

DOS Underwriting Rating Tool

3. Route to UW Director for approval

Apps involved – Email

UW Director

Underwriter

4. Receive request for Higher UW

Authority from UW via email

5. Approve / Reject

6. Email UW to inform of the decision

7. Check for UW Director

decision

UW Authority received?

Yes

No

Submission to Rate process entails leveraging a Document management model that consists of manually moving papers being worked on into various, organized piles that the team manages. Files or file folders have post it notes attached to them to track work that needed to be done with checklist boxes for the team to be able to see what remains

8. Decline Submission

Prone to Error

Prone to Error

Rate pricing problematic as inputs used are

subjective. & incl. lax UW guidelines, UW gut feel &

external paper based competitor bid info.

8

Quote Response Packaging and Rate to Quote processes (As Is):

START

END

1 Quote Response Packaging: Create a quote template document from personal computer

1a. Search for appropriate writing company using the PC’s directory that houses them.

Quote through Bind Processes begin

DOS Underwriting Rating Tool

Producer

Underwriter

3. Receives Quote Package from the

Insurance Company via email

4. Decides w/i 30 days whether to do business with the

insurance company

5. Presents the quote to the customer and reviews the terms

Apps involved - Microsoft Word and PC OS directories

1b. Rekey the information needed for the account and the broker. 1c. Rekey the information needed for the account and the broker. 1d. Add quote options to the page.

1e. Sifts through the explorer Window to scan the Insurance company’s standard subjectivities (from their UW Guidelines) and tweaks any changes to them.

1f. Scans through the inbox for the original email, reopens and begins the reply by attaching the quote and manually inserting some standard text.

1g. Adds marketing documentation, their standard application as well as any supplemental application forms.

1h. Manually customizes the note to the Producer and sends the email back

6. Email UW a Request to Bind (Yes) decision

Customer Agrees to Quote

terms?

Yes

No

6. Reject Quote

2. Rate to Quote Processes: Prints off all the information, assembles and places it into a stack of papers to be managed for the month.

Throughout the month as the UWs receive requests to bind, they will move from this pile to their bind pile. At least 75% of the requests will not come back to bind. Later they will close those out.

Microsoft Word, Outlook, PC Operating System

Rate to Quote processes cont’d

9

Quote through Bind processes (As Is):

START

END

Bind to Issuance Processes begin

Producer

Underwriter

1. Receive the insurer’s quote terms from the UW.

2. Review the quote terms & price with customer. If agreeable, send Request to Bind to UW

4. Receive from the UW the customized customer quote with negotiated terms.

1a. Change the Quote status in the DOS app to "not taken up"

6. Gather any Subjectivities from Customer and send their Proof to UW

YesNo

Request to Bind Notification Received

from Producer?

No

No

1. If Request to Bind is not received within 30 days from sending the quote package, close the Quote in the DOS application

1b. Input the Reason in the DOS app that the Quote was not taken up

2. Create an Account Named file folder to hold all the email communication, quotes and other documents

2a. Create another folder titled Non Renewed and place the Account named file folder into it.

2b. File the Non Renewed folder away for later referencing

Yes

Bind Terms or Price Negotiation

needed?

1.Depending on negotiation needed, may have to resend to the Producer to send to the Customer a customized application to: - build entirely new endorsements to the policy - assess whether optional wording on any endorsement will need to be adjusted-If manuscript endorsements need to be added, An Approvals Sub process of Superiors and Legal approver processes ensues

2. Issue a Binder Document (an agreement that the company will issue a policy document as long as Customer subjectivities are met. In the meantime, the insured has a guarantee of coverage for a set period of time while awaiting the proof)

Custom Application Received from the

Producer/Customer?

Yes

6. Reject Quote

No

Proof of Subjectivities received from the

Producer/Customer ?

No

2a. Create a Binder Document

2b. Sifts through the pc’s explorer Window to find and select the appropriate insurance (writing) company’s standard Binder document template

2c. Re-keys all the information on the binder, lists the agreed coverages and endorsements and modifies the standard subjectivities as needed

2d. Convert the binder to a pdf and attach it to the Producer response email that will be sent to the Customer

3. Create a customer invoice by rekeying appropriate information into the Guidewire billing application

Guidewire Billing System

4. Create an Excel spreadsheet that is connected to a pivot table reporting service.

5. Create a binder folder and move it into a Binder stack of folders in the monthly work piles.

Yes

3. Receive UW response and if negotiations are needed, await customized paperwork.

5. Review the customized quote terms & price with customer. If agreeable, send notice to UW

10

Bind to Issuance processes (As Is):

START

END

Producer

Underwriter

1. Receive Issued Policy and supporting materials from UW

2. Review issued policy, marketing materials & Insurer Invoice with Customer

Proof of Customer Subjectivities Received

from Producer?No

1.Retrieve hard copy file folder from folder stacks and checkmark on that folder’s post it note that the subjectivities documents were received.

2. Shift workflow tasks focus to UW analysis and draft an Underwriter Worksheet (used, in part, for reinsurance auditor purposes).

Customer Policy email received from UWA?

YesNo

Yes

Underwriter Assistant

1.Shuffle through hard copy file folders from the month’s work queue folder stacks and look for any post it notes that have been check marked to indicate that the account’s/case’s subjectivities documents have been received.

2. Create the policy document

2a. Sift through the pc’s explorer window to find and select the appropriate insurance (writing) company’s standard policy document template and rekey all pertinent information.

2b. Add the endorsements and combine all the policy information together in the Word doc and convert it to a PDF.

2b. Manually inputs appropriate account/case information – ex. any deviations from the standard base rate, actions taken to endorse or change coverages.

2. Send the issued policy back to the Producer along with any marketing material

3. Manually gather the policy and all of the electronic information and file away in a file folder until the policy’s renewal term.

4. Update the reporting spreadsheet created for the pivot reporting service (see Quote through Bind UW’s Step 4) with the completed policy data.

3. Evaluate whether any work can resume from the monthly work queue backlog

3. Producer collects the Customer’s premiums and signatures. Sends to appropriate Insurer divisions

2c. Send the policy information to the Underwriters.

Customer Agrees to Quote

terms?

Yes

No3. Policy Not

Issued/Not In Force

4. Policy Issued/ In Force