by Mike Sullivan

Today’s Environment

This is a crucial time for the underwriting industry. Two major trends are shaping the landscape for the near future: the increasing industry-wide focus on improved productivity, and the widespread adoption of advanced pricing methods and tools that are major game changers for insurance firms seeking to differentiate themselves. Not surprisingly, the vast majority of firms will be launching initiatives along both lines.

Given the highly competitive underwriting environment, project speed and accuracy are critical priorities for any undertaking. However, just as with initiatives that involve process changes, adjustment periods are always a concern; problems can easily turn a profitable initiative into a costly write-off.

With these trends affecting both underwriters and the underwriting process itself, many firms are seizing the opportunity to capitalize on new tools and methodologies that enable them to surpass their competitors.

Point B’s Perspective

Based on our experience with many clients across the insurance industry, we know how crucial it is for firms to develop the speed and accuracy to adapt to, and capitalize on, these prevailing trends.

As the industry changes, it is essential to look at the whole picture and align the entire underwriting process—from initial product pricing to new process training sessions—in order to fully maximize the value of the market.

Point B’s underwriting optimization service includes underwriting industry specialists with a proven track record for implementing successful underwriting projects. They also draw on their process improvement expertise and insight from a wide array industries to initiate, operationalize and sustain a process improvement program tailored to the needs of the organization.

Optimize the entire underwriting value chain

Developed to meet the evolving needs of insurers, our rapid improvement program quickly delivers a clear set of outcomes throughout the underwriting value chain to prepare our clients for the road ahead. This value chain includes identifying and evaluating exposure, making underwriting decisions, setting terms and conditions, setting prices and premiums, and being equipped to navigate successful negotiations.

For each step in the value chain, we focus on a number of key areas to deliver measurable results. Our key target areas include:

  • Cultural transformation
  • Underwriting process optimization
  • Provider work optimization
  • Asset inspection cycle optimization
  • Underwriting agent management
  • Underwriting risk management

Targeting those key areas across the value chain leads to measurable results, including:

  • Expense savings
  • Market share growth
  • Improved customer services
  • Financial opportunities (cost reductions and revenue increases)
  • Positive client-centered impacts
  • Provider improvements
  • High-level executable plans

Results from rapid improvement programs

What can underwriters expect from engaging in a rapid improvement program? The following are three examples of the process used and results delivered by our underwriting industry specialists:

Reduced cycle time 89%. A large insurance firm wanted to streamline and optimize its overall underwriting renewal process. Its slow turnaround time was resulting in dissatisfied customers and distribution partners, along with increasing renewal processing costs. Before we implemented the rapid improvement program, our client’s overall cycle time averaged 71 days, with regional variations from 59 to 91 days. The program reduced our client’s cycle time by 89 percent—from 71 days to an average of just three days. In the process, productivity (labor costs) improved by 35 percent.

Shrunk process lead time 78%. At another large insurance firm, our client felt that there was not enough flexibility in underwriting decision-making during the overall underwriting process cycle. However, underwriters were reluctant to refer due to their perception of the complexity and time involved in gathering additional information. We used the value stream to map the process, identifying waste and redundancies and developing standard work processes. As a result, process lead time was reduced by 78 percent—from 56 hours to 12.5 hours.

Increased efficiencies 20%. At a large healthcare insurance firm, two of our client’s underwriting regions had vastly different processes. Our client’s planned expansion in two states required a standard process across the regions to allow for an estimated 15 percent increase in volume with no staffing increase. We helped establish consistency in the underwriting process by using lean six sigma tools (value stream mapping, root cause analysis and kaizen events) to map current processes, identify variances and determine standard processes. As a result, our client exceeded its goal, gaining efficiencies of more than 20 percent to allow for increased volume.

The Bottom Line

Major trends in the underwriting industry are challenging insurance companies to increase productivity and adopt advanced pricing methods and tools that will set them apart in the marketplace.

With a clear, cohesive process in place to incorporate these improvements, the results can be dramatic. Through our rapid improvement program, Point B quickly delivers a clear set of outcomes that improve efficiency, costs and competiveness throughout the entire underwriting value chain.