State-of-the-art underwriting automation today affords the opportunity to do much more than just automate existing procedures and processes. Phenomenal, far-reaching advances in technology now make it possible to vastly improve how work gets done, the timeline to completion, and the quality of decisions. But, as is apparent when we watch old reruns of The Jetsons, change is hard. Changing the way we act or the way we react is very difficult. Technology alone doesn't make impactful change happen.

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While the opportunity for change may be profound, the real question is, What is appropriate and how do you decide what is the best level of automation for your business needs? In simplistic terms, automation in the underwriting arena can be described and differentiated using three categories or levels:

• No-Touch Underwriting – Commonly referred to as straight-through-processing (STP), no-touch underwriting uses automated systems to complete all of the underwriting tasks, including risk selection and pricing. No-touch underwriting is prevalent in the processing of standard personal lines policies and some simple commercial business.
• Low-Touch Underwriting – In a low-touch underwriting approach, tools and engines assist in the management and tracking of status and processes as well as provide data and insights to help the underwriter make a more informed decision. Low-touch underwriting is often used to handle exceptions that are kicked out of personal lines STP systems. It is possible to process all but the most complex commercial risks using a low-touch model.
• High-Touch Underwriting – With a high-touch underwriting approach, the underwriter is directly involved in the evaluation, negotiation, and pricing of the risk. Some automation may assist in workflow management and diary ticklers. This has traditionally been the predominant underwriting model.

More than a few insurers embark on a plan to automate underwriting without really understanding that different levels of automation are possible. Others set objectives for automated underwriting and even invest in a solution path, only to later learn that one part of the organization assumed the end result would be high touch and another part of the organization expected no touch.

What's Best for Your Organization?

Unfortunately, the decision about what level of automated underwriting is the best for an individual organization is not always easy to determine. For most companies, more than one level will be required. The level of automation that is appropriate varies by a number of factors:

• Lines of business
• Size of the risk(s) involved
• Complexity of the risk(s)
• Maturity of analytics that can be applied to help automate the actual underwriting of the risk
• Maturity and availability of the specific data that is needed to comprehensively and successfully underwrite the risk(s)

And then—there is the reality check! While the capability exists to provide significant risk selection and pricing guidance, manage checkpoints, and assist in the decision-making process for even the most complicated underwriting risks, in many cases the industry is simply not ready to accept it.

Like in The Jetsons, thinking differently is not easy for insurance underwriters and leadership. Change is tough to implement. The key is to match the needs of the business with an appropriate automation plan. That plan must be able to deliver the value that is needed to achieve strategic goals, with investments that match the organization's ability to absorb and capitalize on change.