Auto growth and resiliency demand scalable underwriting tech

August 11, 2021 / 5 min read

Auto insurers seeking to grow bigger, better, or both may do well to ensure that the technology supporting their underwriting is equal to the demands of today and tomorrow.

Scalable technologies can help smooth out workflows and bring forward critical customer and policy data when it’s needed to build better products and improve processes. Many insurers have worked for decades to modernize core underwriting systems. But advancement can consume capital and staff time in migrating legacy platforms and tying together complex and diverse strands of data and knowledge.

What’s at stake spans both day-to-day operations and an insurer’s capacity to innovate, diversify, and grow as needs and opportunities arise.

Some auto insurers have found help in data translators, accelerators, and single-point-of-contact application programming interfaces (APIs). These platforms can help simplify contribution, ingestion, and management of first- and third-party data, reducing the capital and time required for data preparation—a task that may consume 50 to 80 percent of insurance data scientists’ time.¹

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Leveraging technology for business resiliency

Regardless of their growth agenda, insurers may find they need to upgrade their data and technology ecosystems just to maintain resiliency in the face of the unexpected, as the events of 2020 clearly illustrated. But even “normal” times can quickly turn abnormal.

A regional data outage drove this point home for one auto insurer, curtailing access to motor vehicle reports. Though the downtime was temporary, it underscored the importance of verifying a risk’s driving history. As detailed in a new case study, the insurer came to Verisk and found ways to not only build redundancy and resiliency but reduce its spending on unnecessary MVRs—75 percent of which may be clean.² Better customer experiences, cost savings, redundancy, and access to innovative tools grew from this carefully considered implementation.

Migrating to the cloud

Cloud-based platforms are proliferating to help meet insureds’ needs instantly and at their convenience. These technologies can distribute workloads among multiple or distributed data centers and combine multisource data, thereby guarding against single points of failure. Verisk’s virtual private cloud can help enable business resiliency and deliver distinct advantages for connectivity, scale, security, and uptime.

The industry is quickly moving to the cloud to capture the best of all worlds. Cloud technology reliably hosts applications, data storage, and software, with easy, secure Internet access for multiple users and lower costs than local storage.

Companies are embracing cloud technology not only to cut costs, but to also support business growth and agility, including the ability to scale solutions quickly to nearly any demand. And the cloud delivers economies of scale as shared resources effectively maximize computing power.

Gearing up for growth

The connection between growth and scalability may seem intuitive, but how can it work in practice? It’s not always about doing more of the same thing; it can also mean doing new things with new technology and data.

One large national auto insurer sought to expand its mature, existing usage-based insurance (UBI) program by tapping into data from connected cars with factory-installed telematics. The challenge was to take driving behavior data from multiple automakers’ systems and reconcile the differences in format and granularity to work with the insurer’s proprietary scoring algorithm.

Working with Verisk helped the insurer extend its UBI program to connected cars and improve the customer purchase experience. The new solution, powered by the Verisk Data Exchange, sits alongside existing dongle and mobile-derived data feeds. Harmonized driving behavior data lets the insurer keep using its proprietary scoring model to offer behavior-based discounts at point of quote to a new set of drivers—with no need for new filings or changes to the existing rating plan. Applicants with connected cars are showing a 3-4x improvement in bind and conversion rates.

Press the accelerator

Another avenue into greater scalability is accelerator platforms such as Guidewire, which recently added Verisk’s LightSpeed^® Personal Auto to the Ready for Guidewire-validated accelerators available in the Guidewire Marketplace. This accelerator uses data resources and predictive analytics to give insurers real-time prefill data on drivers, vehicles, coverages, licensing, violations, and losses—making it possible to quote coverage in two minutes or less.

LightSpeed Personal Auto uses Verisk’s extensive data resources and predictive analytics to bring key decision points further forward in the insurance underwriting workflow, supported by precise business rules to guide each transaction. It’s backed by Verisk’s RISK:check^® Point of Sale, a tool for improving application integrity and combatting premium leakage from underwriting fraud. Users can get underwriting and rating data at quote start, keep more applicants active in the sales pipeline with a more satisfying buying experience, and help contain acquisition costs with targeted data acquisition.

Verisk has hundreds of prebuilt integrations with more than 30 policy administration systems. Our partnerships and accelerators, including Duck Creek, Guidewire, and Majesco, are designed for easy and seamless workflows.

Choose carefully

Whether the target is resiliency, growth, efficiency, or some combination of these goals, success may depend on critical choices made at the outset. The right data and analytics partner can help drive progress with exclusive underwriting insight. The correct focus may mean centering today’s digital expectations with a data-forward strategy. A smart economic model can help target spending on the necessary data to price precisely and sell more. An ecosystem of solutions that work together can help deliver on promises with maximum value and reliable resiliency.

Learn more about innovation strategies for resiliency in auto underwriting and contact a Verisk representative to continue the conversation.

SAS Insights, “5 Data Management Best Practices,” 2019; statistics for insurance industry
Verisk client experience, 2021