The Earnix 2024 Industry Trends report revealed that nearly 75% of insurers have hundreds of rules embedded in their underwriting systems, with 18% stating they manage thousands. This overwhelming number of rules can complicate processes and impede efficiency. In response to these stark figures, Earnix is delving into how insurers can address these complexities and streamline their underwriting processes.
According to the research, the complexity of automated underwriting systems is a significant concern for insurers.
A majority described their environments as either “very complex” or “extremely complex.” As these systems grow more intricate, insurers increasingly recognise the need for simplification.
In moderately complex systems, only 30% of executives felt changes were necessary. This figure jumps to 50% in extremely complex environments, with no respondents advocating for additional complexity.
The findings underline the urgency for streamlined rules to enhance operational efficiency and decision-making clarity.
Challenges of overly complex systems
One major challenge posed by complex underwriting systems is the extended timeframe for implementing rules changes.
Although improvements have been noted—37% of insurers can now make changes in 5-6 months, compared to 7-12 months in 2022—some leaders can introduce updates in weeks, days, or even hours.
Monitoring practices also lag behind. Nearly half (49%) of insurers only assess underwriting rules during the next rate review, and 13% rely on ad hoc monitoring for significant changes.
As rules grow in volume and complexity, identifying inefficiencies or pinpointing which rules influence specific outcomes becomes increasingly difficult.
Moreover, insurers face hurdles in integrating new data sources into their underwriting models. Legacy systems and redundant rules create silos, making it harder to incorporate valuable data for accurate risk assessment.
These challenges highlight the pressing need for streamlined systems that can effectively manage modern data integration.
A path forward
Modern insurance technologies, like Earnix’s Underwrite-It solution, offer promising alternatives for addressing these challenges.
These tools simplify underwriting by enabling insurers to eliminate redundant and conflicting rules. The Earnix platform combines traditional scorecard approaches with advanced machine learning, allowing for integrated pricing and underwriting management.
Such technologies enhance insurers’ ability to incorporate disparate data sources, enabling more accurate risk assessments and real-time insights.
By adopting innovative solutions, insurers can simplify their underwriting operations, respond to market changes more rapidly, and improve customer experiences.
A roadmap to better underwriting outcomes
The unchecked growth of automated underwriting rules can lead to inefficiencies, errors, and redundancies.
To combat this, insurers must adopt a strategic approach involving regular audits and modern automation technologies.
Much like a well-planned road network, an efficient underwriting system should be thoughtfully designed to prevent bottlenecks and duplications.
By streamlining their processes and leveraging advanced technologies, insurers can achieve improved operational efficiency and support long-term growth.
Read the full blog from Earnix here.
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