Why it’s important to streamline submission and logging processes in underwriting
Let’s face it - the current workflow process for submitting and logging of insurance applications for underwriting includes several major points of friction and inefficiencies, leading to significant issues and challenges.
This blog post explains the issues with the current processes, and how streamlining them can help accelerate and improve the entire underwriting process.
The problems are in the processes
Once we broke down the end-to-end process of submission and logging, we were able to identify numerous challenges and issues at several points in the process.
Data transmission between agent and carrier
The process of transferring data from insurance agents to insurance carriers is both cumbersome and time-consuming, for several reasons:
- Complexity of the data. Insurance data often includes a wide range of information, including personal and financial details, medical history, and other relevant information. This complexity can make it difficult to transmit the data efficiently and accurately.
- A lack of standardization in the way data is collected and transmitted makes it difficult for insurance carriers to process and understand the data received. For example, insurance agents or brokers often use different forms or processes for collecting data, which results in variations in the collected information. These inconsistencies make it difficult for insurance carriers to accurately and efficiently process the data, often requiring extra time and resources to standardize the data or reconcile differences in the information, as well as verifying its accuracy.
- Inefficient systems. Most insurance providers and agents may still be using inefficient systems for sending information, which will make the process slower and more susceptible to error. This is particularly true when agents are manually entering data into multiple systems or when they are dealing with large amounts of paperwork. Additionally, if the system is prone to errors or glitches, it may require additional time and resources to troubleshoot and resolve any issues that arise. Inefficient systems can result in errors that can lead to delays in the underwriting process, resulting in costly losses and customer dissatisfaction.
- Security concerns. With respect to security and privacy, securing insurance data is a major factor in the transmission of data, adding layers of complexity and time to the transmission process. For example, to ensure the security and privacy of insurance data, insurance agents and carriers may need to implement additional security measures, such as encryption, secure transmission protocols, and authentication processes. These measures can add additional steps to the data transmission process, which can slow down the process and increase the risk of errors.
Since accurate data is so critical to the underwriting process, any errors and inconsistencies can be extremely costly. If the data is incorrect or incomplete, it can lead to the insurance company making incorrect assumptions or decisions about the policyholder's risk level. This can lead to the insurance company charging the wrong premium, or even rejecting the policy altogether, resulting in a loss of revenue.
Submission and logging
The manual, messy, and labor-intensive nature of the submission and logging process in underwriting divisions of insurance companies is often due to the volume and complexity of the data being processed, as well as the lack of automation.
Similar to the issues with the transmission of data from agent to carrier, inefficient systems and lack of standardization means the process tends to be error-prone and difficult to manage.
Accurate data is also important for the underwriting process because it helps to protect the insurance company's financial stability. If the insurance company takes on too much risk, it can lead to financial losses, which can be harmful to the company's financial health.
Quote and negotiation
Quoting and negotiation in the insurance industry often involves a back-and-forth communication process between the insurance carrier, the insurance agent, and the policyholder. The process of quoting and negotiating an insurance policy can involve multiple rounds of communication between the parties involved, as they work to come to an agreement on the terms and conditions of the policy. This process can be complex and time-consuming. Without a streamlined system in place, these negotiations can take longer than necessary and lead to delays in getting the policy finalized.
The failure to meet consumer expectations
When relying on manual data collection processes for new business submission and underwriting, it can be difficult to meet modern consumer expectations. Consumers in today’s market demand convenience and efficiency, and traditional manual processes tend to be the exact opposite.
Manual data collection processes often involve a lot of paperwork and require multiple steps to complete, and can make the process of obtaining an insurance policy frustrating.
It’s also difficult for insurance underwriters to make sure they are meeting customer expectations while staying within and keeping up with ever-changing regulatory requirements. If they fail to do so, they could end up making decisions that are not compliant with the current regulations, resulting in potential legal penalties or fines. This can ultimately damage the company’s reputation, as customers may lose faith in their ability to make sound decisions.
Lack of resources to transform the data collection processes
A lack of resources also makes it difficult to transform the data collection processes for underwriting in several ways.
- Implementing new data collection processes can be costly, often requiring the purchase of new technology or software, as well as the training of employees to use these tools.
- Transforming data collection processes can also require a significant amount of time and effort. This can be challenging if an insurance company lacks the human resources to dedicate to the project. It may be necessary to hire additional staff or reassign current employees to work on the project, which can be difficult if there are already staffing constraints.
- A lack of resources can also make it difficult to properly test and refine new data collection processes. This can lead to problems or errors in the process, which can be frustrating for policyholders and lead to customer complaints.
A lack of resources can also lead to an inability to keep up with changes in the industry. As technology continues to evolve, organizations must also update their data collection processes in order to remain competitive.
How insurance companies can benefit from streamlining the submission and logging experience
The advantages of streamlining the process are numerous, and result in improved efficiency and productivity, reducing errors, and minimizing risk.
Enabling workflow automation
Transforming these processes enables workflow automation, involving the use of software or other tools to automate tasks such as data entry, document management, and communication between stakeholders.
Some of the benefits of workflow automation for underwriting include:
- Faster, more efficient clearance and registration, since all necessary information and documentation is more easily transmitted, processed, verified for accuracy, and recorded.
- Auto-decline, offered by insurance automation solutions, enables the automated reject an insurance application based on predetermined critera. Based on algorithms that analyze an applicant's risk profile and compare it to the insurer's underwriting guidelines, auto-decline solutions may consider a variety of factors, such as the applicant's age, medical history, driving record, and financial stability.
- Auto-routing, another feature offered by automation solutions, refers to a process where the underwriter uses a computer program or system to automatically evaluate and assess an insurance application, rather than manually reviewing it. This allows underwriters to quickly and efficiently process a large volume of applications, and may also help to reduce the potential for human error or bias in the underwriting process.
Ensuring accuracy and completeness at the point of entry
Streamlining and automating the submission process for underwriting can increase the accuracy and completeness of all submissions at the point of entry in several ways.
- Increased accuracy means reduced risk. Manual data entry and document handling processes are prone to mistakes, such as typos, omissions, and incorrect data entry. Automating these processes can help to eliminate these errors, as data is entered directly into the system and documents are scanned and processed digitally. This also ensure that the underwriting department can base their
- Ensures that all necessary information is collected and provided at the point of entry. For example, an automated system might require that certain fields are completed before a submission can be completed, or it might prompt the user to provide additional information if something is missing. This can help to ensure that all necessary information is collected and provided upfront, rather than having to go back and request additional information later.
- Increased speed and accuracy. Automated processes are faster, while also enabling underwriting departments to make quicker and more accurate decisions that meet customer expectations.
- Compliance. Streamlined processes can help ensure compliance with regulatory requirements by providing real-time updates on regulatory changes and enforcing policies.
Automation and streamlining of the submission and logging process has many additional advantages for insurance companies, including:
- Reduced manual effort. This includes much less manual data entry as well as less time required for verifying the data and fixing errors.
- Less back-and-forth. Automating and streamlining the submission and logging process for underwriting can help to eliminate back-and-forth communications between underwriters, agents, and clients in several ways.
- Reducing the need for manual follow-up: By automating the process of submitting and logging insurance applications, insurers can reduce the need for underwriters and agents to follow up with clients to request additional information or clarification. This can help to streamline the underwriting process and eliminate unnecessary back-and-forth communications.
- Improving transparency: Automation can also help to improve transparency in the underwriting process by providing real-time updates and notifications to underwriters, agents, and clients. For example, an automated system may send an email or text message to a client when their application has been received or when a decision has been made. This can help to keep everyone informed and reduce the need for manual communication.
- Enhancing collaboration: Automation can also help to enhance collaboration between underwriters, agents, and clients by providing a centralized platform for managing and tracking insurance applications. This can help to reduce the need for multiple rounds of communication and ensure that everyone has access to the same information.
- Expansion of underwriting and quoting capacity. Automating and streamlining the submission and logging process for underwriting can help:
- Reduce workload by automating certain tasks in the underwriting process, insurers can reduce the workload for underwriters and other staff, freeing up time and resources for other tasks.
- Improve efficiency by speeding up the evaluation and assessment of insurance applications.
- Enhancing accuracy by reducing the potential for human error. This can help to reduce the need for manual review and correction, further expanding underwriting capacity.
- Reduced costs. By automating certain tasks in the underwriting process, insurers can reduce the need for manual labor, since fewer staff may be needed to process a given volume of applications. Automation also helps insurers to process a larger volume of applications in a shorter period of time, reducing the need for additional staff or resources.
- Speed up response times. By reducing the need for manual review, and improving the accuracy and quality of submissions, the entire underwriting process is accelerated.
- Improved risk selection and more accurate pricing. By taking such a wide range of factors into account, such as the applicant's age, location, driving history, and claims history, automated systems are more accurately able to determine applicants’ risk profiles and the appropriate coverage and premiums. This, together with more accurate, easily-verified data, can help to ensure that insurers are accurately identifying and pricing risk, improving risk pricing.
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