Digital submissions management offers underwriting teams a host of benefits. We’ve already covered:
- The benefits of a digital workflow
- Improvements in business placement
- Speed at which submissions are imported and analysed
- How the best risk can be immediately identified and selected
- How underwriting decisions are captured and inform strategic decisions
- The automatic resolution of missing IMO’s in the broker schedule
There are several scenarios in which this technology combines to resolve daily issues that are the result of an old operating model. Three are outlined below, comparing what currently happens to what could happen with a digital submissions solution.
Correct policy premium
Understanding the status of each vessel in a submission makes a huge impact on profitability. The premium of a vessel that’s laid up is approximately 40% of what it would be if in operation. Whilst the variance is so great, a vessel’s status isn’t typically declared as part of a submission. This leads to a policy being created based on the assumption all are in service. If there are vessels that aren’t in service, a broker will return with an endorsement declaring their status. An underwriter will need to adjust the policy based on new information, lowering the premium. This business has not only become less attractive, but also causes inefficiencies in budget management.
Digitising this process puts the vessel list through a validation check. The process is entirely automated and happens in a matter of seconds. From the outset, an underwriter can see exactly which vessels are in service, and which aren’t. Policies created are based on up-to-date information, leading to relevant premiums and an ongoing focus on attractive business.
Mitigate human error
Errors in manual data entry occur for various reasons, with one of the most common being the repetitive nature of data entry, particularly for large fleets and figures. This is especially true during busy renewal periods, where large quantities of submissions are created at the same time. Most manual data entry processes encounter human error, however, the implications for insurers include a multitude of budgeting, forecasting and finance issues that persist throughout the underwriting year.
It’s difficult to resolve human error when sticking to a traditional workflow. Therefore, it’s not uncommon for a product line in a syndicate to be off forecasted premium (upwards or downwards) of millions each year.
Digital submissions management automates the entire data entry process. Errors in the submission are validated with records correlating to the IMO number in a vast data lake and automatically corrected. If the variance in errors is too great, it’s flagged to the organisation.
This layer of automation greatly reduces the number of errors in data entry typically seen in today’s market. This increases the accuracy of yearly premium estimates and therefore adherence to yearly premium caps. This specifically helps the Chief Operating Officer, who is constantly looking for ways to make the entire organisation/syndicate provide more accurate reports on their figures.
Improve team performance
Digital submissions management isn’t just about data entry, it’s about improving the quality of decisions made and responding to changes quickly. Managing submissions digitally means data relating to underwriting decisions can be captured and analysed. This can be done in real-time and presented to the entire underwriting team.
Currently, reports are produced manually and provided ad hoc. This means that an underwriting team’s hit rate can only be assessed sporadically. Your hit rate is the percentage of winning business vs the percentage of business lost or declined.
Whilst this may seem counter intuitive at first, an underwriting team typically does not want a 100% hit rate. Whilst a 100% hit rate can be deemed successful to new initiates, seasoned professionals know that winning all business typically tells you that you’re too cheap vs the competition. Some may say it’s a tactical choice, however it’s not very common in the marine insurance market and is seen as unsustainable.
A healthy hit rate is around 65%. The ability to monitor this figure throughout the year, whenever you wish, ensures you can identify and respond to variances quickly. You can do much more than look at this score, however. If it’s low, you can understand specifically why you are not winning business.
Reasons for loss or declinature are captured and presented back to the underwriting team. Trends become clear to see and help direct action to mitigate further lost business. For business lost, this can be as simple as the price being too high, or terms being rejected. For business declined, it may be that brokers don’t understand the organisations appetite. This can result in consulting the broker and explaining what business you do find attractive.
The best brokers can be outlined through capturing the source of written business. These brokers are ones which you can emphasise efforts to improve business relations to draw more business from them.
Meanwhile, if overall portfolio performance is suffering due to high losses, you can utilise pricing models, such as Concirrus’ pricing model, to review the risk score of all business considered. If written business is scored too low, a threshold can be put in place to ensure better quality business is written moving forward. This can also change the organisations understanding around a need for reinsurance given the portfolio’s existing position.
Digital submissions management can remove the dependency of strategic decisions on manual interim reviews to real-time understanding. It makes an organisation far more agile, applying specific changes as and when needed to ensure wider organisation objectives are achieved.
To find out how submissions can help your business, visit our resource page, or get in touch.