Challenges of (and solutions for) Handling Loss-Run Data in the Underwriting Process
by Jai Kumar
An insurance loss run report is a record of all claims made against a policyholder’s insurance coverage. While requesting new coverage or renewing an existing policy, brokers must submit this report to insurance companies. The loss run reports assist the underwriter in determining the degree of risk involved in offering insurance protection to a certain policyholder. Insurance companies use this report to approve or decline insurance applications, as well as determine how much premium to charge if they accept the application.
The creation of loss-run reports is a labor-intensive and complicated process. Critical challenges include:
There is no fixed format for loss-run files
Every insurance firm has a unique format for generating loss run reports. This becomes a challenge for underwriters as they must manually deal with multiple data sets in different, non-standardized formats. The problem gets more severe when the insurance seeker has policies from multiple carriers. In those instances, the underwriter has the complicated task of taking data from multiple, separate formats and organizing it under their own format. This process often results in delays and increases the scope of human error.
It is a manual, time-consuming, and costly process
There are significant delays when insurance companies draft loss-run reports manually. When a single loss run report needs to be completed manually it can take a week or more to complete. This is a huge waste of both time and money. Spending this much effort on minor insurance coverage is not realistic for many insurance companies.
Additionally, underwriters must painstakingly search through mountains of documentation to find the information they need to adequately assess and price the risk. This lowers their effectiveness and is an ineffective use of their time and abilities. There is a considerable likelihood that the underwriters may miss key details, which can end up costing an insurer a significant amount of money.
Lack of proper task tracking has a potential for loss
Brokers receive and manage requests for loss runs daily. Typically, these arrive in the form of an email or a letter. Given the volume of correspondence most brokers receive each day, there is the potential for loss run report requests to be lost or misplaced. If a request about a valuable client is among those that are not handled directly there is potential for the broker and insurance carrier to lose out on a valuable placement or renewal, affecting profitability.
The good news – technology can help address these challenges and make the handling of loss-run data efficient and effortless. Xceedance Digital Underwriting Assistant (XDUA), an AI/ML-powered modern loss and exposure data analysis solution, automates processing loss run reports and exposure data to help insurers and MGAs do away with the tiring manual process of identifying and extracting unstructured data from different carrier proprietary systems and storing that in spreadsheets. They can 1) create a structure repository of historic loss-run reports, 2) use them in the policy term decision making process and 3) use them for business insights.
With Digital Underwriting Assistant from Xceedance, insurers report impressive improvements, including:
- Average handling time reduced by up to 20% to 50%
- 90-95% data accuracy (and climbing)
- Loss-run costs lowered by more than 20%
Xceedance Digital Underwriting Assistant simplifies loss-run data extraction and enables insurers to digitize multiple years of loss-run data files. With Xceedance, underwriters are empowered to make better decisions based on multiple years of loss-run data.
Discover how Digital Underwriting Assistant can benefit your organization – schedule a call to learn more today.
Jai Kumar is VP – digital transformation unit at Xceedance.