Underwriting Processes

The ability to evaluate and adequately price risk determines the success or lack of success of any risk entity. Because of the continually changing and evolving nature of risk – especially in commercial and specialty risks, it is difficult to determine the appropriate coverage and the associated costs of risk.

Same Info but Different Conclusions

Underwriters, like all people, think and process information differently. Two experienced underwriters can look at the same information and come to different conclusions on the risk class, underwriting class, or exposure class that is the best representation for an insured. Furthermore, Underwriter A can be effective and thorough in their underwriting process, write an account and then get hit with some big losses. Underwriter B can take some shortcuts, miss some critical things, write an account and then have great loss experience.

Identify Bad Underwriting Quickly

Of course, over a long period of time Underwriter A will stand out as the superior underwriter. In the mean time, Underwriter B could put a lot of bad risk on the books. The ability to analyze a portfolio of underwriting file unstructured data enables operational executives to more quickly and efficiently identify issues, problems, and inconsistencies in the way accounts are being evaluated.

No Two Risks are the Same

From another perspective, there are no two risks that are the same. Yet, processes force underwriters to classify or code risks into one of the available code selections. It is only when there is a clear and obvious problem that companies decide new codes are needed. Subsequently, they undertake a lengthy process to evaluate a bunch of files and come up with new codes and train people on the use of the new codes.

Analyzing Without Coding

The ability to evaluate risks without codes enables executives to more quickly react to issues BEFORE they become clear and obvious problems. This is because ALL of the information about a particular risk issue is being included in the unstructured data analysis – rather than just the code selected by an underwriter.

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WHAT Unstructured Data Do Underwriters Get?

Insurance underwriters in most lines of business, but especially commercial and specialty lines, receive and produce an enormous amount of unstructured data. Underwriters receive applications for insurance. The boxes checked by applicants provide some perspective on the nature of the risk presented by the applicant. More …

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