Data and analytics serve to predict consumer behaviors and thefuture behavior of the underwriting process, and results of arecent FirstBest Data-Powered UnderwritingStudy reiterate the importance of data and analytics fordriving profitability and better risk decisions.

According to the survey 56% of respondents state that superiordata access can directly lead to profitable underwriting results,and 49% agree that other benefits from data use drive improvedbetter decision-making and improved underwriting quality.

But despite the importance of data and analytics noted by surveyparticipants, only 11% of carrier respondents indicate satisfactionwith their current data and analytics capabilities, with 89%indicating varying degrees of dissatisfaction with their currentstrategy.

While data and analytics are valuable in predicting the futureof the market, a third of companies provide access to less than 25%of their underwriters. When asked, "What percentage of yourunderwriters has access to data and analytic tools," 43% of surveyrespondents observed that less than half of their underwriters haveappropriate access to analytic tools in the current front-officetechnology setting.

Top survey responders indicated that an expanded, moreconvenient access to data in general, particularly third-partydata, would help drive the integration of data in the field.Furthermore, the survey reveals that more than 60% of carriersacknowledged higher spending on data and analytic capabilities thisyear, but the investment does not necessarily return the desireddata-driven results for prompt and precise underwriting.Approximately 75% of survey participants denoted that data andanalytics quality, accessibility and consolidation is a key needmoving forward.

But due to a lack of "integration" and limited data expertise,the implementation of data in the decision making process can behindered or nearly impossible. For many carriers, according to thesurvey, integration is manual, with underwriters, techs and adminsall attempting to obtain and piece together disparate data fromdifferent systems. The problem for insurers, then, is obtainingdata and analytics, and delivering them quickly in an applicableform to the underwriting process.

"Insurance carriers are increasingly incorporating data assetsin their underwriting processes, but they are also often impairedby the task of prioritizing and integrating a sea of data forproductive risk assessment and submissions," said John Belizaire,FirstBest CEO and founder. "In fact, carriers are increasinglyrelying on dedicated, rules-driven underwriting workstations at thepoint of decision — and in collaboration with policy managementsystems — for actionable data and predictive analytics to helpincrease the speed and quality of risk decisions inmission-critical underwriting."

Data and analytics are used to predict the future behavior inthe underwriting process, but the survey claims that they tend tobe more backward-facing when they come out of the underwritingprocess. This indicates that the opportunity for growth anddevelopment lies in capturing and analyzing the "data out" thatcomes from the underwriting process and marrying it with a varietyof internal and external data. By feeding that data back into theunderwriting process, FirstBest predicts better, more profitableunderwriting decisions as a result.

In order to leverage the opportunities of data and analytics,the report suggests a three-step strategy to enact data-drivenunderwriting for more profitable results.

First, the study suggests to drive data to the point ofdecision. By using underwriting workstations to bring together allof the data and analytics that the underwriter needs into oneplace, the deliverance of fingertip access can assist in making thedata accessible and easily applicable. Unlike policy administrationsystems, an underrating workstation would specifically be designedfor underwriting teams. 

Furthermore, these workstations go beyond data aggregation. Theyimplement rules to automatically obtain the right data related tothe risk, before the underwriter even asks for it, presenting thedata within the context of the underwriting process. This enablesunderwriters to harness the power of data without having to be adata expert, according to the survey. Establishing a rules-drivenprocess ensures that each underwriter uses the right data to makedecisions every time, causing underwriters to make better decisionsand produce more profitable results.

The second strategy the survey presents is vested in allowingdata to drive the process. The power of the data extends beyondfingertip access, as carriers use data to drive parts of theunderwriting process as a whole. For example, underwritingworkstations use business rules and workflow to harness the powerof data and analytics in establishing the next steps, includingwhether a manager referral is required, predicting which additionaldata needs to be obtained, creating checklist reminders and muchmore.

But within the underwriting function, successful companiesimplement data hubs to bring disparate data together from varioussources, including claims, policy, and third party sources. Thedata hubs serve to normalize the data and automatically deliver thedata and analytical capabilities directly to the underwriters atthe point of decision. Therefore, instead of wasting time huntingfor data, underwriters can access more data in the underwritingprocess to make better decisions in less time. 

This process also allows companies to extract data from theunderwriting process, and by combining it with claims and otherdata, information can be pumped back into the underwriting processalong with new and valuable insights, creating a continuous cycleand fostering better decision-making.

"As more and more data and analytical tools become available,insurers must determine not only what data they will use but alsohow and when they will use it," according to Belizaire. "Our recentsurvey and market experience validates that too often underwritersneed to scour a variety of sources and systems to get theinformation they need. Particularly for complex commercial risks,underwriters must often manually seek and move information from onesystem to another in fragmented procedures that can lead to errors,delays, and disruptions in winning and renewing business."

The FirstBest Data-Powered Underwriting Survey questioned asection of 58 respondents from both commercial and life/healthinsurers. Participants included carriers of various sized,representing management, underwriting, business operations andIT.