How RiskOps Improves Underwriting Efficiency

Traditionally, “improving efficiency” in underwriting has meant trying to speed up the existing process. The aim has been to help underwriters review faster, so they can touch more and more submissions. While this might sound helpful, it generally hasn’t yielded significant results. After a few decades of underwriting workbench implementations, the problem still exists - and is arguably worse than ever. 

RiskOps takes a different approach. Instead of trying to improve efficiency by speeding up existing processes, RiskOps tackles the process itself. By focusing on the portfolio-wide status and objectives, RiskOps aims to improve efficiency by more effectively allocating underwriters’ time.

Traditional Underwriting Workflow: First In, First Out

In traditional underwriting, submissions come in through either email or an organization’s dedicated portal, and are manually logged and reviewed. Most underwriters default to a first-in, first-out (FIFO) approach to their inbox, examining submissions in the order they arrive. Subjective relationships sometimes also play a role, with underwriters choosing to work first on submissions from agents or brokers that they have good relationships with. With high submission volumes, this largely manual approach quickly falls short.

Let’s say an insurer receives 50,000 submissions in a month - far more than the underwriting team is able to actually review. Human underwriters sifting through the stack might touch 20,000. Of that amount, they might only find 5000 submissions that they want to quote, and of those quotes they might win around 2000. 

Some of the 30,000 submissions that did not get reviewed that month might have been excellent opportunities that were missed. Meanwhile, only 20% of the submissions reviewed were actually worth underwriters’ time, and less than half of those were ultimately won. With such a steep drop-off from submissions to bound business, a small increase in processing speed is unlikely to make a meaningful difference in won deals. 

If we look back at the example, the problem starts all the way back at the beginning. Manual human review was only able to cover less than half of the total submissions, and there’s no guarantee that they were the best submissions. The FIFO approach means that prioritization is largely just based on when a submission arrived - with the actual quality of each submission basically random. Likewise, while an underwriter might pull submissions first for brokers they have a good relationship with, there’s no guarantee that person is actually sending the best deals.

And with more submissions coming in all the time, by the time underwriters can start actually reviewing risks, they’re already behind.

RiskOps Workflow: Focusing On the Right Things.

To make a real difference for efficiency, RiskOps changes the angle of approach. The ultimate objective is to win business that aligns with the organization’s portfolio goals, and so the first step to achieving that objective is making sure those kinds of deals are surfaced first for the underwriter’s review.

To do this, a RiskOps system leverages AI to examine submissions as they come in, and pulls the submissions that best match the organization’s stated goals to the top. Underwriters might actually review fewer submissions, but because those submissions will be higher-appetite (and more likely to be winnable), the overall quality of output increases.

Going back to our example insurer: with RiskOps, all 50,000 submissions are reviewed by AI, with the highest-appetite, most-winnable deals surfaced first for underwriters’ attention. Based on the system’s recommendations underwriters might review only 17,000 submissions - fewer than under the traditional FIFO system. Of those 17,000 submissions reviewed, however, they might quote 8000, and go on to win 4000. That’s 2x better results, in the same amount of time.

The big difference, of course, is how underwriters’ time was used. With RiskOps, underwriters did not need to page through each submission to determine if it was good business (or even relevant). Instead, underwriters were handed the 17,000 best submissions, and were able to spend more time evaluating those risks. 

Rather than trying to simply speed up what’s been done in the past, RiskOps is focused on solving for the underwriting organization’s actual objectives. In this case, allowing underwriters to focus on fewer, higher-quality submissions allows them to make better use of their time, and write more (and more profitable) business overall.

While many underwriting technology solutions have tried to improve underwriting efficiency, most fell short by making ultimately superficial improvements to a fundamentally inefficient system. With the RiskOps approach, underwriter organizations are empowered to work smarter-not-harder, and achieve meaningful efficiency gains.

Learn more about Federato’s RiskOps platform with a self-guided product tour, or connect with us for a live demo today.