“While insurers do not identify a pending underwriter shortage as reason for pursuing automation, we expect that the current workforce of front-line underwriters will have a much smaller number of replacements when they retire or otherwise leave these positions,” Mr. Weinstein noted.

As a result, he said, “product differentiation will no longer live at the front-end of the process. Success will be dependent upon information-gathering and back-end-supported analyses driving sophisticated pricing models.”

The Conning analyst predicts that these dynamics “will force an averaging of data requirements,” which would at last make SEMCI–the Holy Grail for many in the insurance world–a minimum standard for insurers and independent agents. This evolution will ultimately minimize the ability of carriers to employ proprietary data collection differences as an advantage, Conning added.

Mr. Weinstein predicts that underwriters will grow increasingly reliant on automation to speed up the process, because “inevitably, an insurer's failure to respond to agents rapidly and reliably could soon disqualify it from the standard marketplace.”

This is sure to be music to the ears of independent agents, as well as their allies in the battle for standards. However, since we have heard this song before in different keys, we will believe the demise of proprietary carrier systems when we actually see it. But we can't help but hum along and hope Conning's crystal ball is right.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 30, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.