Underwriting is the process of assessing risk for insurance companies and other lenders by analyzing potential borrowers’ financial data. Only those likely to repay a loan or fulfill their contractual obligations receive coverage.
It’s a vital component of the insurance process but can be both time-consuming and costly. As such, many companies are looking to streamline their underwriting processes to reduce costs and still provide quality services.
One of the ways to streamline this process is by automation. CRE software from Blooma uses machine learning and artificial intelligence to automate and make the underwriting process efficient. This article will discuss automating and other steps you can take to improve this process.
Step One: Gather All Necessary Information Upfront
The first step is gathering all necessary information upfront before evaluating an applicant’s file further. It includes:
- Verifying identity documents such as driver’s licenses and passports.
- Collecting employment history.
- Obtaining credit reports.
- Ordering appraisals of property values when applicable.
- Ensuring medical records have been provided if required for health-related policies.
Gathering these items at once helps avoid unnecessary delays caused by requesting additional documentation later. Having everything ready from day one also allows more timely consideration of applicants’ files with fewer hiccups, making decision-making easier.
Step Two: Conduct Risk Analysis
The next step to expedite your underwriting is by using risk-analysis tools. These tools allow you to evaluate applicants’ financial histories quickly and accurately. You won’t have to manually comb through vast amounts of data each time a new customer applies for coverage or loan approval.
These systems use algorithms explicitly designed to assess potential customers’ creditworthiness or insurance risks. They provide an invaluable service not just in terms of speeding up the process but also ensuring accuracy and consistency when evaluating applications.
Step Three: Automate Where Possible
Automation technologies help streamline the underwriting process, saving time and improving accuracy. They also cut down on redundant tasks that can be tedious to complete without automation. For instance, you can automate manual processes such as data entry to reduce human errors.
Machine learning algorithms can even automatically identify patterns in customer behavior. It allows you to assess risk more accurately and, in turn, make decisions more confidently.
Step Four: Utilize Digital Platforms
Digital platforms make it easier for brokers and insurers to quickly access the information they need from customers. It’s an easy and secure exchange of documents without going back and forth multiple times. These digital platforms also provide a secure way to reduce paperwork, speed up approvals, and decrease overall costs.
It’s essential, however, that these solutions meet all regulatory requirements set forth by governing bodies. Otherwise, sanctions may incur if you fail to adhere to them or certain confidential matters get exposed unintentionally. The sanctions often result from a lack of proper security measures on the said platforms.
Step Five: Leverage Data Analytics And Business Intelligence Tools
Data analytics can help you better understand your customer base and make more informed decisions regarding policy issuance or renewal processes. It could include identifying potential fraud cases quickly and determining ideal product mixes for target markets.
You may also leverage business intelligence (BI) tools such as dashboards. With them, you’ll provide real-time visibility into key performance metrics. It will enable your teams to identify areas requiring improvement or optimization so they can take appropriate actions swiftly. The result is time savings across the board and improved overall efficiency levels.
Additionally, these same dashboard solutions are helpful when making risk assessments. It’s because all the necessary information is readily available. You get it without having to manually search for it every single time, thus expediting decision-making processes considerably.
Step Six: Utilize AI Technology
Artificial Intelligence technology is also instrumental in speeding up the underwriting process. AI employs machine learning algorithms like deep neural networks, which allow computers to learn how best to respond to customer needs.
They also work through natural language processing systems. These are the ones that allow your company to analyze large amounts of text data and quickly find patterns across multiple documents.
It’s also important to note that you can use AI to automate decisions, allowing faster access to information. It ensures those accepted into policy can pay premiums and reduces time-to-market significantly.
Step Seven: Invest In Quality Control
All underwriting processes must remain compliant with regulations set forth by governing bodies. Examples are those from the Federal Insurance Office or any state insurance commissioner. Having thorough review procedures also minimizes errors during initial evaluations, allowing for faster applications without sacrificing accuracy. So, investing in quality control is key.
Likewise, ensure your teams receive proper training regarding regulatory requirements before making decisions. It keeps you legally safe and prevents costly mistakes, which could further slow processing times down.
Step Eight: Utilize Third-Party Solutions To Help Streamline Processes
Even with more personnel available internally to handle your underwriting workloads, there are now services to outsource this task. Depending on your needs and budget constraints, you can seek their services entirely, either short-term or long-term.
These solutions typically involve experienced professionals trained to ensure everything runs smoothly during the evaluation stages. They can help streamline underwriting processes significantly and reduce turnaround time throughout your system. External vendors can help you by:
- Providing secure storage space for documents needing evaluation.
- Capturing signatures electronically and eliminating the need for paper contracts.
- Automating repetitive tasks.
- Alerting team members when changes occur so they can act quickly.
By utilizing these solutions, your company can focus more on evaluating applications. You’ll be able to free up internal resources and focus on more critical tasks such as marketing. You also will save time trying to manage complex administrative duties yourself.
Further, asking questions about any outstanding issues early on will save time. There’ll be few or no discrepancies between what you requested and what’s provided. Inquiries into any unique circumstances which could affect pricing should also occur. The information can then be factored into the overall evaluation process.
Step Nine: Scrutinize Your Processes For Areas Of Improvement
Analyzing your underwriting processes for areas that need improvement doesn’t just help you make decisions faster. It also uncovers any inefficiencies within your system as a whole. This step mainly involves:
- Examining how long it takes from initial application, submission, and approval.
- Identifying which steps take the longest to evaluate.
- Exploring why specific files are rejected compared to others.
- Determining what information could be collected upfront, such as medical screenings, to reduce delays during later stages.
Once you’ve uncovered all the weak points, implement appropriate procedures to address them adequately. It will help you avoid future bottlenecks that could hinder the whole process.
Step Ten: Take Advantage Of Regulatory Changes
As an underwriter, you must know of any new regulatory changes affecting your work. These can often open opportunities for faster processing times through streamlined application processes or more efficient data collection practices.
Staying on top of news related to insurance will also keep you one step ahead when it’s time to issue policies.
Step Eleven: Increase Communication Between Teams And Applicants
Finally, increasing communication between teams, such as those who generate quotes, is crucial. You must also have direct contact with customers to speed up underwriting significantly. This tactic lets your representatives answer questions promptly and provide accurate updates regarding file statuses.
On the other hand, applicants can provide any additional documentation needed to complete the application if required. It eliminates unnecessary delays caused by either party’s lack of clear understanding of the situation. The experience becomes much more efficient, leading to higher customer satisfaction ratings.
It’s essential, though, that customer service remains a top priority when communicating with applicants. Otherwise, this could lead to further issues like a tarnished reputation that affects your bottom line negatively.
The underwriting process can be lengthy, but there are some clever ways to speed it up. You can do them without compromising accuracy or quality standards whatsoever. However, the key to speeding up this process lies in being prepared and organized from the start.
By following these steps, you’ll have a much easier time evaluating risks, making decisions about coverage, and setting pricing structures accordingly. You’ll also significantly reduce costs and improve the customer experience for even higher retention rates.