Richard Hartley, CEO & Co-Founder of Cytora talks all things underwriting productivity post-COVID in this InsureTech Connect Presentation. Learn which interventions you can begin utilising to drive productivity-led growth, how COVID-19 has impacted productivity, and what you can do to turnaround this trend.
Transcript
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[Music]
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hello i’m richard ceo of sartorium
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i’m going to talk about how commercial
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insurers can drive growth
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in a post-covered world by focusing on
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underwriting productivity historically
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commercial insurers have have strived
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yet struggled to break the relationship
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between their premium growth
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and their expense base
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and
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typically we’ve seen commercial insurers
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growing in in situations where their
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their expense grave growth has has
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increased at the same rate as their
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premium
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or at the same time struggling to grow
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in situations where
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their their expenses are remaining the
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same
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and there’s been three main reasons for
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this as we moved on to the second slide
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number one underwriters spend a lot of
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time focusing on on manual
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manual tasks quite low value tasks and
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many of these are manual data lookups
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where per submission android is spending
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a lot of time going to 10
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plus different websites and gathering
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information that relates to the risk
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purely to find out whether that risk is
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in appetite or outside episode
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secondly underwriters um
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receive a lot of submissions from their
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broker partners which are outside of
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appetite and in our experience at cytora
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this can be as many as 30 to 40 percent
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of the total submissions they receive
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every single day
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and lastly
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underwriters aren’t helped by um
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by their prioritization they don’t
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generally have an intelligent way to
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guide their focus and to allow them to
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focus their time on the highest value
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submissions which drive most value to
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the commercial insurance company
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and in aggregate these three areas these
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free
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points of capacity leakage in an
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underwriting team contribute to a
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material loss of premium over time where
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underwriting teams could write much more
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premium
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and quite radically shift the balance
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between their cost base and their
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premium but they don’t bind it because
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of all the impediments they have to
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productivity in the team and and the
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onset of covid19 has has actually
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worsened this and amplified this problem
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which means um it’s becoming
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underwriting productivity it’s becoming
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a renewed and increasing focus for
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mid-market commercial underwriting teams
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and this has been really driven by by
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two main areas on the one hand
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underwriting teams face more uncertainty
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there’s more macroeconomic uncertainty
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in the world which means constraints are
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now in place in terms of the capacity
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teams actually have and even some
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insurance companies have put a hiring
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freeze which means
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underwriters have to do more with less
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and secondly and alongside that brokers
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are sending underwriters now more
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submissions so per day underwriters
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receiving a higher volume of submissions
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and a starker difference in value across
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that array of different submissions
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which means the prioritization problem
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that they’re faced with have become more
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acute and more stark
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underwriters now have to do more
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with the same resources and because of
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the increase in competitive intensity
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they have to respond and turn around
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submissions faster to their broker
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partners in order to convert that
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business i’m now going to move on
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and and talk about free interventions
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insurers can do today to drive
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productivity-led growth
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and the exciting thing about this is
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these free interventions are achievable
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today
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and can have measurable benefits very
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early on post-deployment the first
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intervention that mid-market insurers
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can make is really ensuring underwriters
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don’t waste time on low value activities
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in our experience underwriters can spend
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around 30 minutes per submission
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doing
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10 plus manual lookups of information
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going to 10 different websites and
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gathering information that relates to
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the property to the company
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to the flood the fire the windstorm and
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the subsidence risk also checking all of
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the financial activities of the of the
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company
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and this contributes to a a huge amount
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of time being spent
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on on quite manual and low value
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activities
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today it’s possible to auto augment and
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pre-populate this risk information
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before the underwriter even looks at the
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submission
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and this can materially speed up
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the the capacity of the underwriting
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team
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the second area of value
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is um addressing the problem that
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underwriters face where they have to
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look at many out of appetite submissions
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um which don’t which don’t match the the
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criteria of of the insurance company
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and this can be up to 30 to 40 percent
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of all the submissions
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our underwriters receive on a daily
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basis from their brokers
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it’s now possible to automatically
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filter out the submissions that are
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outside appetite
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allowing the underwriters to purely
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focus their time on appetite-aligned
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submissions that do match your risk
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appetite and do meet the value criteria
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that they’re seeking in combination
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both these activities can free up around
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25 of the capacity of of an underwriting
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team allowing them to drive much more
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value and much more premium per
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underwriter the second major
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intervention uh insurance companies can
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make
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is intelligently guiding underwriters to
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the highest value submissions
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now underwriters receive a multitude of
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submissions every single day
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and there’s a big difference between
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the high value submissions which have
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you know a large amount of premium
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associated with them they’re profitable
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they have a good retention rate all the
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way through to the low value submissions
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which doesn’t really make sense for
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underwriters to spend their time on
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today underwriters generally work on a
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first in first out basis which means
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they address their submissions in
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chronological order
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using machine learning it’s now possible
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to rank the submissions in order of
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value
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allowing underwriters to focus on the
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highest value submissions
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first
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to increase the turnaround time so to
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actually shorten the turnaround time of
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those submissions to brokers
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allowing them to then convert more of
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those submissions and there’s a
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well-established
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very strong correlation between the
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turnaround time
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and the chance of conversion and that’s
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that’s really where where underwriters
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can achieve a lot of value today
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it’s also possible to intelligently
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nudge underwriters to follow up on the
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highest value submissions to drive a
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further increase in conversion so after
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the underwriter has quoted the risk
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nudging the undirected to follow up on
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the risk to the broker to really convert
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the highest value ones
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and in combination
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these two activities of the intelligent
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prioritization
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and and the nudges can drive a 20
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increase in growth written premium per
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underwriter and this is really really
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exciting and and a very concrete
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innovation as possible today to achieve
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in in the mid market underwriting
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process
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so we’ve talked about increasing the
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capacity of an underwriting team by
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augmenting automatically the risk
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information associated with submissions
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and we’ve also talked about the
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intelligent prioritization of
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submissions according to value
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the third major
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intervention underwriters can make
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is really ensuring they’re focused on
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the right submissions to capture the
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market opportunity
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and this is really closing the gap
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between
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the macro
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underwriting objectives
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and the frontline day-to-day
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underwriting execution ensuring the
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objectives are translated
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as purely and rapidly as possible
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through to what underwriters spend their
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time doing
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the two failure modes we see today where
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underwriters struggle and the objectives
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and the execution aren’t synchronized is
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where underwriters spend time on areas
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which don’t truly reflect the business
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plan objectives
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or areas where the business objectives
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are known but they translate very slowly
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and inefficiently through to the
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frontline underwriting activities
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today it’s possible for a chief
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underwriting officer to achieve real cut
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real-time control
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over what risks are bound
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and also to exert and adapt control over
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the appetite within within the the the
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period in which the underwriting has
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happened to make dynamic changes and
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really exert more intelligent control
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over the formation of the portfolio
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through time at cytora we call this
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real-time control over the book
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and it really narrows the distance
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between the portfolio objectives and the
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frontline underwriting execution
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in conclusion
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it’s possible in in mid-market today to
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drive sustained productivity-led growth
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with the free interventions we’ve talked
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about
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and the value of this to the insurance
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company
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is to really break the closely coupled
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relationship between
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premium growth and cost
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allowing the insurance company to drive
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additional premium at the same expense
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base
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with these three interventions
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insurance company can increase the
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capacity
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in the underwriting team
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allowing them to write more more
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submissions and more policies
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at the same at the same resource
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secondly to drive
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a better ratio and improved ratio by 20
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of growth written premium
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to uh individual underwriters allowing
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each underwriter to expand their book of
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business to process more submissions and
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ultimately buy more policies
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and lastly to achieve much more of a
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real-time
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closely synchronized relationship
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between
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the high-level portfolio objectives and
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and the frontline underwriting execution
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allowing them to adapt
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as quickly as possible to emerging
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opportunities to emerging market
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opportunities and capture the best
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opportunities ahead of the market thank
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you very much for listening today i
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think this is a truly exciting time for
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for commercial insurers to take
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advantage of the new world we’re in uh
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please get in touch with with me at
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saitoro to find out more and i look
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forward to
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engaging further on this topic thank you
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very much
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[Music]