ARender - Underwriting Blog

Four Ways Insurance Companies Can Modernize Contract Underwriting

Posted by ARender on Sep 15, 2022 6:00:00 AM

Underwriting is one of the most critical parts of insurance contract management. Insurance underwriting is the process by which insurers evaluate an insurance policy application for validation—be it for a home, car, or an individual’s health or life insurance—based on various factors used to assess risk. 

Today’s insurance companies face challenges with limited resources compounded by incomplete and often out-of-date or inaccurate databases, making it challenging to approve or disprove applications promptly. The result? Customers take their business elsewhere or choose not to purchase at all. 

Adopting a digital-first contract management process is a necessary shift for insurance companies to meet evolving consumer demands and keep pace with today’s digital landscape. Yet this requires a careful reassessment of the processes that comprise contract management and the technologies available to facilitate those workflows.


Why Traditional Underwriting is No Longer Cutting It

When an individual submits an insurance application, they put their fate in the hands of underwriters — often third-party organisms who assess the risk of providing coverage to that individual and establish cost based on a complex set of variables. In an ideal world, these teams would have fast, easy access to accurate and complete information in the database to make a timely and informed decision based on quantifiable data. 

The reality is less than ideal. Plagued by incomplete databases and inefficient information systems, underwriters often have to look to external sources to find the desired information — which means accessing third-party systems or sources, extending the application response time, or making a decision based on incomplete data sets. Moreover, according to a study by McKinsey, underwriters spend anywhere from 30-40 percent of their time on administrative tasks, such as rekeying third-party data or manually performing analyses, because they are missing the necessary technologies to streamline manual tasks.

Underwriting—and the insurance industry in general—has historically been slow to change from the legacy manual processes towards new trends in automation. However, making suitable technological investments today is crucial to retaining customers with evolving expectations. 


Rethinking Contract Management

All insurers face challenges when handling paperwork—contract submissions, quotes, or loss run reports. In addition, underwriters and insurers deal with high volumes of unstructured content daily—often in various formats and stored in multiple third-party systems making the approval process both time-consuming and costly. 

Even with information stored digitally, the data needed to approve a single application can come from virtually any system or format. The process of locating, accessing, opening, and reviewing documents can be challenging with high demands and the expectation of short response times imposed by the modern consumer. Traditional file-sharing and electronic content management (ECM) systems can struggle to deliver results promptly and often fail to meet auditing and security standards.

In an age where customer satisfaction is paramount, this is unacceptable.

Go Digital 

When applications involve too many steps or long waits, digital consumers — now acclimated to often instantaneous, digital processes — tend to abandon the application and move to another, faster service or product.

Moving beyond traditional underwriting requires moving to a software-based and automated process rather than forms-based and manual. This requires adopting the right technologies. Choosing an ECM solution built to handle complex insurance processes, and enhanced with the right features to ensure fast, easy access to content stored in any ECM system, in any format, is the first step toward streamlining contract management processes.

By embracing a more agile document management process, organizations eliminate slow-moving manual processes and any vulnerabilities they may engender along the way—such as inaccuracies or compliance and security breaches.  

Automate When Possible

Traditional contract generation, negotiation, and approval rely on hands-on governance to move contracts forward—which wastes time and introduces an opportunity for human error to disrupt the process. Automating these processes wherever possible can ensure greater efficiency, minimize risk, and improve regulatory compliance

According to a recent study, 46% of contract management professionals say an abundance of manual tasks makes collaborating on contracts challenging due to the sheer volume of information and procedures. Underwriters and insurance professionals also struggle with duplicate or inaccurate data and a lack of traceability which puts the organization in jeopardy of security fallibilities. The more information is managed, and the more complex the workflow, the more organizations can benefit from automation for standardized, traceable workflows. 

Implementing automation capabilities can help gather as much information as possible from all necessary sources, reducing requests for applicants to re-submit information and ensuring the protection of sensitive data with features like automated redaction

Put the Customer First

According to a recent report from the IBM Institute of Business Value (IBV), 42% of customers don’t fully trust their insurer—which means the industry has significant room for improvement. In addition, as digital technologies penetrate all sectors and aspects of business, customers are less likely to support the slow-moving, manual processes of the past—especially when competitors are adapting to the digital demand.

Increasingly, personalized, streamlined experiences are king, and insurance companies must rise to the occasion. With fast, web-based access to the right data at the right time, insurers can create more personalized experiences, and underwriters can respond more swiftly to new requests. Advanced document viewing technology can help underwriters save valuable time and become more effective at their jobs while boosting customer satisfaction and retention.

Invest in a Complete Solution 

While a conventional digital process built on a standard ECM solution certainly offers benefits over managing packets of paper forms and grainy photocopies, it can still struggle to provide an efficient, accelerated, and accurate underwriting process. 

For instance, PDFs that need to be downloaded, opened via the native application, printed, filled, signed, scanned, and sent manually remain a pain point for insurers. In addition, organizations that rely on outdated contract management procedures or incomplete solutions impede employee productivity and ultimately repel customers as time-to-completion increases. 

When handling new contract applications, a web-based document viewer can eliminate various access barriers—based on complex document formats, incompatible applications or devices, or security barriers. Investing in modern ECM technology enhanced with a high-speed content viewing solution can help support an accelerated transformation toward streamlined contract management processes, accelerating response times and improving customer retention. 


Ready to Modernize?

More than ever, speed is critical for insurance companies to deliver a positive customer experience. Underwriting insurance policies can take weeks with traditional, manual-driven processes, and lengthy exchange cycles can push today’s digital consumers out the door. 

The move beyond traditional underwriting requires modern, digital processes that provide the right balance of speed, automation, and security to help bring applications to completeness and allow insurers and underwriters to make informed decisions as quickly as possible. Faster contract review means faster revenue, improved customer retention, and better use of time and resources for insurers and applicants. 


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Topics: Document process, Insurance, Financial Services