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Insurers: Capture The Expertise Now

(Posted by Guest Blogger and Friend of Underwriters Everywhere, Ian Turvill.)

The results of a survey conducted by the CPCU Society (the society for P&C insurance underwriters), in which its 26,000 members were asked for their views on the industry's future, were released today.

The survey focused on what any impending changes might mean for their careers. One of the largest concerns that emerged was the "double whammy" effect of many thousands of baby boomers retiring over the next decade or so, combined with slowing rates of new recruits into the underwriting profession. As many as 66% of the survey respondents foresaw an "experience gap" as very likely to form in the next five years if nothing is done.

Among the solutions recommended were:

"More aggressive recruiting efforts; improved training; retaining retiree capital via consulting, mentoring, and flexible scheduling; more competitive compensation and benefits; and enhanced positive visibility for the industry and its career options."

I have another suggestion: Start an aggressive process of discovering the rules and analytics that govern the underwriting process and automating their execution through the use of Enterprise Decision Management.

The industry can see the impact of such an effort in microcosm by looking at the outcomes at individual companies that have applied this approach. For example, The Auto Club Group of Michigan automated its underwriting process, and switched from a situation where 100% of its policies were underwritten manually to a point where 99% of all policies automatically. As a result, they were able to dramatically increase the size of their distribution network and able to increase the number of policies processed annually by 35% WITHOUT adding to the underwriting staff.

I think it stands to reason that if the industry as a whole adopted similar EDM-based techniques that they could enjoy similar benefits. Perhaps the industry could even sustain a loss of 20% to 30% of its underwriting capacity without truly seeing a dramatic impact on overall output! And now is the time to do it, because all the expertise still resides in these firms.

It's certainly worth thinking about, and we'd be delighted to share more information with the CPCU Society. In fact, I believe that we plan to do exactly that: I will be speaking at the upcoming Annual Meeting of the CPCU Society in Honolulu in September, together with several leading industry representatives. Do join us!

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