CONNING: AUTOMATIC COMMERCIAL UNDERWRITING NOT AUTOMATICALLY PROFITABLE

The commercial property/casualty industry is on the threshold of an “adapt or perish” decision when it comes to underwriting automation, according to a study from Conning Research & Consulting Inc. The study, “Executing Commercial Underwriting Automation—It’s Only a Tool,” finds that companies have spent considerable financial resources and time creating proprietary underwriting solutions in an attempt to differentiate their products, yet ultimately this “tech war” of proprietary front-end solutions will be short lived. A type of SEMCI (single-entry, multiple-company interface) will reportedly become a minimum standard for insurers and independent agents, minimizing the ability of insurers to use front-end data collection differences as an advantage. Commercial insurers are spending a lot to automate a system that has for years been dominated by trained underwriters, said Conning Research Director Michael Weinstein. Commercial underwriting will reportedly continue to become more and more reliant on automation for the entire policy life-cycle, according to the study. Inevitably, an insurer’s failure to respond to agents rapidly and reliably could soon disqualify it from the standard marketplace. Agents’ success using insurers’ front-end underwriting software, the entire underwriting process needs to be automated and standardized in the future, Weinstein said.