Executives, underwriters, sales leaders, and actuaries are eager to take their underwriting systems to the next level but may face challenges as they explore automated underwriting options. Find out the facts about how a custom AU solution is implemented and scaled with minimal disruption to your organization and team.
In the 25 years since its arrival in the industry, automated, or digital, underwriting has helped reduce inefficiencies and accelerate sales for insurers worldwide. Yet some insurers still hesitate to launch automated underwriting solutions.
Whether prompted by concerns about cost, fear of the unknown, or loyalty to existing processes, these insurers are missing out on the potential transformation of their underwriting strategy – a transformation that has enabled their competitors to achieve efficiencies, stabilize underwriting decisions, aggregate valuable data, and measurably improve the customer experience.
Many executives, underwriters, sales leaders, and actuaries are itching to take their underwriting systems to the next level. We know this because as the lead sales and account managers for RGA’s automated underwriting (AU) software, AURA NEXT, we have responded to thousands of questions via requests for proposals (RFPs) from insurers looking to take the next step. In this article, we outline the most common obstacles insurers have identified in considering an AU solution, along with our insights on how a custom AU system is implemented and scaled.
It comes as no surprise that cost concerns are among the first objections raised around a new AU option – both the subscription cost of the software and internal resources needed to learn, launch, and administer it.
Yes, it costs money to adopt an outside platform, but once operational, it does not take long for the efficiencies of a digital solution to make up for its cost. For AURA NEXT, we have estimated that the break-even costs of the platform are often achieved at around 8,000-10,000 applications per year.
Additionally, most AU platforms offer flexible pricing models. For example, insurers can access a traditional subscription model, a transaction-based model where they pay for only the applications put through the system, or a model in which the system cost is rolled into a reinsurance treaty.
As for internal resources to adopt and lead the AU system, the resource commitment is modest. We typically request from our clients a core team of 5-8 dedicated professionals focused on the implementation. A typical project takes four to seven months with the team immersed in both a technical and underwriting workstream.
Any SaaS (Software as a Service) implementation takes time and effort, but an experienced software vendor should lay out a clear plan that has proven successful for other clients. RGA has implemented AURA NEXT dozens of times. Over those rollouts, we have standardized the process and frequently collaborate with our client teams to apply their specific deployment methodologies and processes.
Some insurers contend that their unique market position is not suited to a standard AU implementation. While markets have unique characteristics, we have discovered that, even globally, customers are demanding similar features that can only be provided by digital underwriting processes.
These demands include point-of-sale decisions, improved customer experience, better user journeys, the ability to buy via mobile platforms, and the rapid delivery of policies and new products. Additionally, AU systems should allow insurers to set underwriting rulesets for different regions or business units, allowing for customization at the local level while still reaping the benefits of a centralized system for data collection.
This is an evergreen concern for professionals across many industries, particularly as technology like AI (Artificial Intelligence) continues to advance. But, as pointed out in this recent article on AI, we have yet to see a technology that has replaced a substantial number of jobs.
Our experience with AU matches that reality; our clients use the technology to develop efficiencies that grow the business without reducing underwriters. In fact, because AU provides immediate decisions for 30-70% of applications, underwriters have the freedom to focus on more complex cases instead of rubber-stamping simple cases – a much better use of their time and skills.
Once the software is implemented, an insurer can also use AU as a training tool, so new and existing underwriters can rapidly gain experience on the insurer’s rulesets.
IT professionals play a critical role in the implementation of AU, so their engagement in the rollout is essential. Occasionally we field some pushback from IT managers concerned about how AU will mesh with legacy IT programs or apps.
In reality, cloud solutions reduce the complexity of IT infrastructure. IT teams can retain existing apps, workflows, policy administration, and imaging systems, and then turn over the enormously complex part of the business – underwriting – to the software. AU systems like AURA NEXT eliminate software redundancies and stabilize IT costs to a predicable subscription fee. At the same time, the software provides a secure, stable, and scalable environment while meeting compliance requirements for SOC 2, GDPR (General Data Protection Regulation), and other regulations.
In our discussions with insurers worldwide, we sometimes encounter a fixation with the status quo. Yet it doesn’t take much to remind these same professionals that insurance is often a fast-follower industry; if insurers don’t move quickly enough, they’ll get left behind by competitors that adopted AU and are well on their way to increasing sales, revolutionizing product development, and embracing omni-channel approaches that meet customers on their own terms.
In the end, that is the most compelling argument to make for someone with no obvious urgency to make a change: Do you want to improve the customer experience? It is the surest way to strengthen sales and retain business, and AU enables more customers to complete the insurance process in a single session and improve customer satisfaction across all channels.
In the 20 years since RGA first introduced our AU platform, it’s been exciting and rewarding to see how clients have adopted the product, adapted it to their specific needs, and used it as a launching point for successful new products. After using AURA NEXT, many clients have used data from the platform to adjust rules and increase the acceptance of more complex risks. Ultimately, that is the power of AU – accelerating the underwriting of simple cases, drawing on underwriter skills to focus on complex cases, and using a wealth of data to look back at the pipeline and improve processes even further.
Change is uncomfortable, but inevitable. We have seen firsthand the remarkable and revolutionary changes our clients have achieved by adopting AU. Contact RGA to learn how AURA NEXT can help meet your underwriting needs.
