The enduring operational impact of the pandemic on Underwriting
The wholesale migration of the (re)insurance market to remote working nearly a year ago is a well-regarded achievement. It was largely enabled through Third Party Placing Platforms such as PPL, through email, conferencing systems, and remote access of core broker and insurer systems. In London, the increase in volume on the Placing Platforms has been well covered in the insurance press, which has significantly increased confidence in the market in the usage of such tools.
There appears to be widespread consensus that the ‘old market’ will not return once Covid is over, and a hybrid market will emerge eventually in its place, with many of the practices and processes developed in 2020 becoming enduring.
However, the shift to remote working has not been without its challenges, and contention has bubbled to the surface.
Some brokers have complained of underwriters “missing in action” and “hiding behind email,” and there have been examples of last-minute issues when brokers have “gone” to pick-up lines. It is difficult to know to what extent these issues are just the normal “cut and thrust” of the renewal season in a hardening market, teething problems attributed to an almost overnight switch to remote working, or whether they are symptomatic of deeper issues that have resulted from the absence of face-to-face contact. The quote attributed to George Bernard Shaw springs to mind:
Given that many of these problems have been particularly apparent in the just past renewal season, I believe they are more than just teething problems. Furthermore, the absence of physical queues has meant that some brokers have taken a broad sweep approach in their marketing and hit the “send all” button with little consideration of published appetite. This is entirely understandable in the context of a hardening market. On the one hand, the “eyes of underwriters” have lit-up at the prospect of seeing business they would previously not have seen; on the other hand, the operational challenge faced by underwriters of triaging hundreds of submissions each day has been severe.
There are countless stories of underwriting teams working extended days to stay on top of the inflow of these submissions as well as the known renewals and predicted new business. Given the extended years of soft market conditions in many classes, this is understandable; the “fear of missing out” is very real.
Further operational pressure has come from the underwriter’s best practice of optimising the balance in their portfolios, with reduced lines sizes delivering the same GWP through rate increases and new business, with a consequential operational workload increase from there now being more risks in the portfolio.
It is probably too early to say precisely which changes from 2020 will survive the other side of the pandemic. We need to consider the impact of the virtual rooms, Blueprint Two, and the evolution of this “technical” hard market.
Maintaining this, though, will require hardening and automation of the remote working processes to remove contention and friction. On a practical level, this will mean more integration between the Placing Platforms and insurer systems, resulting in efficient work queue management and data flows. It will mean 100% integration between the insurer’s systems and data sources used to deliver underwriting decisions, as well as those used to manage business plans and the constituent portfolios. Dual or triple keying of data will stop.
Process orchestration and workflow will be essential to enable consistently fast and thorough underwriter decision-making, meeting exceeding broker and client expectations. Rapid triage and data input will be automated with AI.
Getting it right will mean Underwriters and Brokers will be freed-up to concentrate on developing high-value and high-impact solution options for clients at a lower cost than today. The possibility of executing underwriting processes at pace to serve brokers and clients, without compromising underwriting standards will yield real competitive advantage.