It's generally accepted that the first automobile policy in the U.S. was sold in 1897 in Dayton, Ohio. For more than 100 years, automobile insurance would be underwritten fundamentally the same way as that first policy: manually and customer-by-customer. However, the effort that began more than 10 years ago to apply business intelligence to auto-insurance underwriting has transformed what had once been an art into a standardized and automated process at many carriers, where manual processing is the exception rather than the rule.
“Personal auto is clearly the most advanced and most mature in its use of business intelligence and analytics. It really is a science,” says Deb Smallwood, founder, Strategy Meets Action (SMA). She believes that homeowners is the next line poised for a process evolution, with the only limiting factor being gaps in available data.
The adoption of advanced analytics in commercial lines has been slower. “There's a continuum [in automation] from how much margin there is in the business and how complex it is,” says Matthew Josefowicz, managing director at Novarica.
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