SMA Perspective for LT - Underwriting 03-13-15 FINAL

Modern Underwriting: Leveraging New Intelligence Capabilities

© 2015 SMA All Rights Reserved www.strategymeetsaction.com Page 1 An SMA Perspective

Modern Underwriting:

Leveraging New Intelligence Capabilities

Featuring as an example:

L&T Infotech AccuRUSI

An SMA Perspective

Author: Deb Smallwood, Partner

Published Date: February, 2015

This perspective is based on SMA’s

ongoing research on underwriting and the modernization of legacy environments.

L&T Infotech has purchased distribution rights.



Table of Contents

New Possibilities for Underwriting 3

Rethinking Underwriting Automation

Reward and Risk

Modern Underwriting Business Capabilities 4

The Modern Underwriting Workstation

Foundation of Information and Insight

Modern Underwriting Technology Capabilities 6

The Fundamentals

Finding the Right Approach

About L&T Infotech 7

L&T Infotech Company Overview

AccuRUSI Breadth and Functionality

Strategy Meets Action Commentary 10

About Strategy Meets Action 10

About This

Perspective

This SMA Perspective is

a summary of SMA’s

ongoing research on

underwriting and the

modernization of legacy

environments.

L&T Infotech has

purchased distribution

rights for summary

results of selected

research and opinion.

This is not paid-for

research.



New Possibilities for Underwriting

Underwriting capabilities are instrumental in differentiation today. In fact, insurers are

just on the cusp of finding out how truly important they will be in shaping the future of

the industry. The bottom line is that to achieve success and compete effectively, modern

underwriting approaches and solutions are becoming an imperative.

When it comes to underwriting large complex risks, the “touch” of highly skilled and

experienced underwriters is still required to ensure the right mix of coverages and that

the price is properly formulated in order to financially protect the exposures and risks.

Historically – this “touch of art” has been a manual process, one that is highly dependent

on people and experience, with the blend of some automation. Today, with the

automation, tools, data sources, and analytics that are now available, there are new

possibilities for modernizing these traditional touch points with the next generation

workstation.

Rethinking Underwriting Automation

Currently, the implementation of modern policy administration systems has been the

primary solution avenue for modernizing the full underwriting process. Although these

investments have brought significant business benefit and value to the overall

underwriting process, they typically fall short when it comes to automating the desktop

of the underwriter for the management of complex risks. The gap is real and the impact

significant. SMA views the next generation underwriting workstation as the solution to

close this gap in capabilities. It becomes the vehicle for improving expense ratios and

underwriting productivity, using automation and the aggregation of information across

different applications via a single interface to enable a single view of risk.

So why is this the right time to rethink the underwriter’s desktop? Why now, especially

when it appears that the traditional approaches are presently providing adequate support?

And why now, when good financial results are evidenced by acceptable combined ratios

on the books of business? Part of the reason is that the world that surrounds and heavily

influences insurance is rapidly changing. And at the same time, there are changes taking

place inside the industry. But, the need to grow profitably with new risks continues. The

fact is, the more accurately an underwriter is able to assess and price (especially for new

risks), the better the outcome for both the risk and the portfolio. Competitors are not

standing still. SMA’s recent research, 2015 Strategic Initiatives: Making sense of the shifts,

shows the adoption rate is picking up, with 26% of commercial lines insurers investing in

underwriting solutions.

Reward and Risk

Thanks to maturing and emerging technologies as well as an abundance of valuable

information, there are indeed new ways to accomplish far-reaching underwriting

transformation. It is possible to make smarter, more informed decisions by using the new

types and sources of data that are currently available. New levels of sophistication in

information about risk and customer intelligence are possible. The ability to assemble,

massage, and interpret information is creating new opportunities to better assess the risks

Underwriting capabilities

are instrumental in

differentiation today. To

achieve success and

compete effectively,

modern underwriting

approaches and solu-

tions are becoming an

imperative.

Thanks to maturing and

emerging technologies

as well as an abundance

of information, there are

new ways to accomplish

far-reaching under-

writing transformation.



and to gain new risk intelligence at the coverage and the portfolio level. There are new

ways to keep the methodologies and the tools used by the underwriter current.

While these new possibilities are profound, the risk associated with not rethinking the

underwriter’s desktop is equally profound. Those insurers that fall behind stand to lose

major ground in the competitive game. The impact will be experienced in many

dimensions. The laggards will likely lack the ability to respond quickly to changing

conditions and new opportunities. They will not have the ability to easily and quickly utilize

new sources of data, capitalize on social data, and implement new analytic tools. They

will find it difficult to scale with market and competitive shifts and nearly impossible to

adjust quickly to market and pricing changes in real time. It will become more and more

difficult to enforce shifting underwriting guidelines.

And the last, but very real risk: seasoned, experienced underwriters are reaching

retirement age, and that means a significant loss of underwriting knowledge and skill for

the organization. This loss can be difficult to manage because replacement experience

and skills are not readily available. Hence, there is another key reason for insurers to

deploy more modern underwriter desktops that fully capitalize on new sources of

intelligence and insight.

Modern Underwriting Business Capabilities

Modern capabilities for the underwriter and underwriting processes offer new levels of

efficiency and effectiveness. The possibilities are remarkable, enabling new levels of

competitive advantage and the ability to scale to meet changing conditions.

Transformation requires more than an enhancement of fundamental underwriting

capabilities. Insurers must think differently about tools and automation, viewing

capabilities with a new mindset and focusing on how to deliver a better value proposition

for the customer and the business. At the heart of underwriting transformation, sits the

next generation underwriting workstation. These powerful desktop solutions are able to

deliver next generation business capabilities by providing a more comprehensive view of

risk assessment and risk analysis combined with the insights to optimally manage the risk.

This advanced risk intelligence enables a single view of the customer, the risk, and the

portfolio – a single view that improves productivity, enables better underwriting decisions,

and enhances customer relationships.

The Modern Underwriting Workstation

A modern underwriting workstation builds on the foundation of the policy administration

platform, extending the value and power of modern policy system investments. Current

SMA research shows the support for many of the underwriter’s activities for complex risks

falls outside the policy administration system. A modern workstation provides support for

all these activities. It allows insurers to capitalize on an increasing amount of third-party

and social data and to use new tools and technologies that facilitate better processes,

better insights, better audit trails, and new approaches to the management of the

business. Historical information and insight on trends are readily available. Analytics are

applied in real time, delivering analysis that is more current and comprehensive. The

modern workstation creates a collaborative working mode with full visibility. It gives

Modern underwriting

business capabilities

offer new levels of

efficiency and

effectiveness. Powerful

next generation desktop

solutions deliver

advanced risk

intelligence – a single

view of the customer,

the risk, and the

portfolio that improves

productivity, enables

better underwriting

decisions, and enhances

customer relationships.



insurers the ability to capitalize on mapping and geospatial location intelligence, predictive

analytics, and advanced models – creating an optimized and innovative underwriting

environment for complex risks.

Foundation of Information and Insight

The foundation for a next generation underwriting workstation is information and insight.

The workstation itself must be able to capitalize on that information and insight with

intuitive, intelligent, and interconnected competencies.

Intuitive

The intuitive capabilities of a modern underwriting workstation give underwriters just the

right additional information and insight, with an appropriate level of automation for each

risk and activity. Intuitive business competencies make it easier to understand what

particular data, information, processing support, and tools the underwriter needs to best

assess and address a particular risk at a particular point in time. Intuitive capabilities

provide an underwriter with guided flexibility to make real-time adjustments and fine tune

rules and pricing based on specialized knowledge of the risk, client, and portfolio.

Intelligent

The intelligence capabilities of a modern underwriting workstation can significantly

augment the expertise and experience of the underwriter by incorporating and taking

advantage of new sources of data and innovative models. The advanced functionality

enables underwriters to apply additional intelligence and consequently make better

decisions. At the same time, controlled discipline is applied, resulting in process and

pricing consistency, proper controls, override with reason, automatic referrals, and more.

Interconnected

The interconnection capabilities of a next generation underwriting workstation make it

possible to connect seamlessly with everything an underwriter needs. The workstation

performs as an integration hub, connecting the flow of any data (incoming and/or

outgoing) to any system – facilitating an easy and complete plug-and-play connection to

manual checklists, common and specialized data sources, policy and other core systems,

and more – all without rekeying or duplicating data. The integration extends easily to

automated workflow, document management systems, and various other processes,

systems, and tools.

Information and Insights

There is real business value in the information and insights that a modern underwriting

workstation is able to deliver. New types of data can be exploited, including third-party

data. Additional and more advanced analytics can be leveraged. A wide variety of new

models can be considered. More advanced levels of business management are possible

at both the risk and portfolio level. Powerful visualization, thanks to sophisticated mapping

and location intelligence, helps drive improved judgment and decision.



Modern Underwriting Technology Capabilities

The technical requirements of a modern underwriting workstation expand beyond what a

modern policy administration solution (PAS) is designed to provide. The technology

requirements include a risk intelligence platform that allows easy integration with tools,

spreadsheets, models, and external data. This platform needs to support an environment

that integrates easily with internal systems and data sources and models as well as

external data sources. The platform makes it simple to capitalize on maturing and

emerging technologies such as those that deliver location intelligence and geospatial and

mapping insights.

The Fundamentals

The fundamental requirements for modern underwriting technology capabilities are

shown in Figure 1.

Figure 1. Modern Underwriting Technology Capabilities

The required technical capabilities of a modern or next generation underwriting

workstation include:

Configurable workflows and rules engines – The workstation must use modern

configuration tools. By augmenting rules-based workflow management with analytics

and intelligence, the management of workflows can be much more dynamic. The

routing of work and the assignment of cases can be automatically orchestrated based

on accurate knowledge and system-generated wisdom from automated underwriting

guidelines and rules.

Modern platform and real-time synchronization – The workstation must be

fully integrated with quote, policy, billing, claims, financial, social, and demographic

data as well as data from other public data sources and analytic models. Examples

include CAT models, flood and geospatial mapping, and emerging technologies.

Flexibility is of the utmost importance. This means leveraging SOA principles so that

Source: Strategy Meets Action 2015



plug-and-play solutions can be integrated and deployed quickly and there can be an

easy exchange of data from a wide variety of sources. It must be possible to

dynamically integrate new and real-time data, as well as big data. For most insurers,

this ability to dynamically integrate new information and new models is a major

difference-maker – one that has the potential to significantly impact outcomes.

Advanced business intelligence – dashboards, alerts, and analytics – The

modern workstation should give insurers the flexibility to integrate any and all data

sources, models, and analytics to provide advanced decision making and enhance

visibility in the area of risk assessment and pricing.

Advanced user experience platform – The interaction between the underwriter

and the system is extremely important. The workstation must use modern user

experience technologies and responsive design principles – making it possible to work

on any device and any platform as well as connect to different back-end systems and

data sources. The workstation must have the power to deliver a user experience that

is practical, effective, meaningful, and valuable. Underwriters should perceive the

workstation as a welcome assistant, one that is easy to use and efficient in helping

them do their jobs.

Finding the Right Approach

Finding the right solution approach can be a complex undertaking. It is important to

consider the IT environment, the state of the policy administration systems being used,

and the level of risk analysis that is being conducted by the underwriter outside of the

policy administration system. For most insurers, given the complexity of needs and

environments, packaged software is not always the optimal solution.

Custom-built solutions for modern underwriting workstations can offer many advantages

and in many cases, provide a powerful approach to extending capabilities to meet distinct

business needs. Customized approaches allow insurers to tackle particular business

challenges and address specialized opportunities with a focus on the exact competencies

that meet the needs of their unique situations.

About L&T Infotech

L&T Infotech is a fully-owned subsidiary of Larsen & Toubro (L&T), a $14.5B engineering

and technology conglomerate that is one of India’s oldest and most respected companies.

Founded over 75 years ago by two Danish engineers, L&T has built a reputation as a

financially sound organization, possessing a strong engineering culture, driven by world-

class process and quality standards, and governed by a values-based management style.

L&T Infotech Company Overview

Headquartered in Mumbai, India, L&T Infotech operates through 14 delivery centers and

22 sales offices around the globe. With annual revenues of about $850M and over 18,000

employees globally, L&T Infotech is organized along industry verticals and has focused

its energies on providing premier technology services to its chosen market.

Finding the right solution

approach can be a

complex undertaking.

Custom-built solutions

for modern underwriting

workstations can offer

many advantages and in

many cases, provide a

powerful approach to

extending capabilities to

meet distinct business

needs.

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With over 3000 associates serving more than 20 leading insurance players globally, the

dedicated insurance business unit offers a wide range of IT solutions and services. This

unit is the fastest growing vertical within L&T, experiencing a CAGR of over 30% for the

last ten years, with over 90% repeat business.

AccuRUSI Breadth and Functionality

L&T Infotech offers AccuRUSI (Accurate Risk Underwriting through Systems Integration),

an underwriting workbench solution that creates a unified work environment for the

underwriter. This solution, comprised of customizable components and framework rather

than traditional package software, offers insurers business value in a variety of ways:

enhanced accuracy in risk selection and pricing; improved underwriting productivity and

responsiveness; and greater consistency and control over underwriting processes, risk

visualization, and accelerated development.

L&T Infotech’s goal is to transform the underwriting function by bringing rigor, efficiency,

and control to processes by leveraging advances in technology and data availability. The

solution provides a very strong integration platform and a single, unified workbench that

can review and record every detail related to the underwriting process. With AccuRUSI,

underwriters save time in gathering data and are able to focus more on analysis and

decision-making with the help of automated intelligent alerts and enforcement of controls.

AccuRUSI capabilities include:

Advanced Risk Analytics

Comprehensive assessment of account and risk quality and quantification of risk

through scoring engines.

Geocoding, hazard data, and mapping of perils.

Risk accumulation management for multiple perils, regions, and lines of business.

Case profiling and cloning, risk warnings, and streamlined processing for consistent

and informed underwriting decision making.

Business and operational health check monitoring through performance dashboards.

Unified and Productive Work Environment

Truly integrated platform for all underwriting processing needs and data analysis.

Real-time underwriting enabled by effective task and workflow management with risk

alerts and notifications.

Seamless extension of the policy administration environment and business processes.

Collaboration between underwriters and also with other stakeholders.

Automated case prioritization and assignment.

Delightful User Experience

Tablet-friendly and underwriter-friendly screen design and navigation.

Underwriting-centric functional design elements such as SANG (Status, Alert, Notes,

and Guidelines).

L&T Infotech’s goal for

the AccuRUSI under-

writing workbench

solution is to transform

the underwriting

function by bringing

rigor, efficiency, and

control to processes by

leveraging advances in

technology and data

availability.



Plug-ins for Microsoft Outlook, configurable rules engine, and workflow controls.

ACORD-based integration adaptors with core systems.

AccuRUSI offers flexible and configurable components that jump-start a customized

development cycle for building an advanced underwriting solution. The solution provides

prebuilt business capabilities and a platform for technology components.



Strategy Meets Action Commentary

The benefits of next generation underwriting workstations are quantifiable and real. The

cost of waiting is high. Now is the time when insurers should be viewing underwriting

capabilities with a fresh mindset. It is important to reimagine and rethink what a next

generation underwriting workstation is capable of delivering – to consider the total

business value proposition – driving competitive advantage and profitable growth.

When, where, and how to start? When? Now, if not yesterday. Where? First, understand

what is indeed possible with the offerings available today and look at what will be possible

in the not-too-distant future. Then, set priorities and use business terms to describe the

capabilities that go on the priority list. It is important to agree on what is most urgent.

That agreement is easier to reach when business professionals and IT professionals can

have a meaningful conversation. Next, understand and evaluate the solution options.

Determine the path that best fits the needs of your organization, and then just get started.

And, how to start? For some insurers, particularly those with strong strategic planning

organizations in place, it is simply a matter of shifting focus to the possibilities for

underwriting. For others, it might help to bring in expertise to articulate the possibilities

and connect their value to the unique characteristics and goals of your company. Helpful

guidance is available via research and advisory companies, such as SMA, and from service

providers that currently offer advanced solutions, such as L&T Infotech. The important

thing is to make progress – one way or another! Time is of the essence.

About Strategy Meets Action

Strategy Meets Action (SMA) is dedicated to helping the business of insurance modernize,

optimize, and innovate for competitive advantage. Exclusively serving the insurance

industry, SMA blends unbiased research findings with expertise and experience to deliver

business and technology insights, research, and advice to insurers and IT solution

providers. By leveraging best practices from both the management consulting and

research advisory disciplines, we take a unique approach – offering an unrivaled set of

services, including retainers, research, consulting, events, and innovation offerings.

This SMA Perspective is a summary of SMA’s ongoing research on underwriting and the

modernization of legacy environments. L&T Infotech has purchased distribution rights for

summary results of selected research and opinion.

Additional information on SMA can be found at www.strategymeetsaction.com.

Contact the author Deb Smallwood, SMA Founder at 603.770.9090 or

[email protected].

http://www.strategymeetsaction.com/

mailto:[email protected]

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SMA Perspective for LT - Underwriting 03-13-15 FINAL