Two decades pursuing one goal:
Greater P&C profitability.

Case Studies

Revisiting a Book of Business Greater Clarity for Profitability

Revisiting a Book of Business

Facing increasing losses, the management team of a multi-regional carrier decided that they needed to perform a broad but selective re-underwriting of their homeowners book. While their primary objective was to clean up their portfolio in terms of insurance-to-value (ITV) and pre-existing hazards/conditions, they also needed to ensure the process could:

  1. easily integrate with and facilitate optimal handling within their workflow management system, ImageRight; and
  2. establish an easily accessible database of inspection results to evaluate the effectiveness of the client’s re-underwriting efforts. Underwriting resources would be available but limited for performing reviews of the re-underwriting surveys, so a highly discrete prioritization of reports for review was critical, as was the application of automation in the clearing of clean surveys to mitigate review by underwriters.

To meet these demands, the carrier selected Millennium based on our reputation for handling difficult integration issues, our proven workflow management capabilities in ad hoc analytical reporting within MAPS and Millennium’s high-quality property surveys.

In order to prioritize inspections for the appropriate level of underwriting review, and to meet the complicated ImageRight integration objectives of the client, Millennium devised a codification process. That process was driven by the highly configurable Stack Logic® process within MAPS. Since two discrete but similar underwriting processes needed to be supported (one for new business currently being written and another for the re-underwriting initiative), the prioritization and routing of inspections to two separate underwriting organizations also needed to be supported. The resulting structure, as represented in the diagram below, allowed for a unique codification of each completed survey, consisting of policy number, order type (new business versus re-underwriting) and survey results (i.e., did the inspection have any issues and if so what type?), as defined in the client’s Stack Logic configuration.

That structure allowed for work queues to be structured within MAPS that could then be mirrored within the client’s ImageRight implementation. Therefore, the most problematic cases could be directly routed to senior underwriters, modest issues were forwarded to less experienced underwriters and clean surveys were applied directly to the policies, alleviating the need for any underwriter engagement. The efficiency savings provided by MAPS, coupled with the increase in premium generated by the re-underwriting efforts, provided a substantial ROI for the carrier and established a stronger book of business.

Based on their experience working within MAPS, the client decided to fully implement MAPS reporting capabilities, using the program for the recording of underwriting decisions. By having each underwriter apply a disposition code to each inspection, reflecting the underwriter’s decision (e.g., cancel, increase coverage, send condition remediation letter, etc.), the client was able to develop their own inspection program management reports. These reports helped identify potential areas of underwriting inconsistency and potential adverse selection within their agency base, further strengthening both their underwriting organization and their agency oversight.

Greater Clarity for Profitability

The Problem:
A carrier was struggling with legacy systems that could not provide detailed insight necessary to take accurate underwriting actions for individual homeowners and dwelling fire policies. Limited visibility meant they often found themselves doing business from a blind alley.

Senior management and personal lines management could merely determine if a policy was in force, cancelled at initial underwriting or non-renewed at expiration. Likewise, it was impossible to know if a policy covered a property that had no hazard or replacement cost issues, or remained in force through efforts to mitigate or remove underwriting concerns.  If the policy was cancelled or non-renewed, it was only possible to discern the agency producing the business and the underwriter assigned to the agency. The limited information made in-depth performance analysis of agencies and staff difficult as there was no chronology of actions or record of the underwriting decision rationale.

The Solution:
Adopting Millennium’s Automated Property System (MAPS) enabled the recording of actions and captured the thought process supporting those actions. The possible actions range from no underwriting action taken, to immediate cancellation or non-renewal, to an interaction with the agent and insured to correct deficiencies noted in the Millennium report to retain the policy. The underwriters can use the free-form note area to describe their evaluation of the property and note their logic for the underwriting action.

The client is now able to define the disposition (action) codes for their accounts to align them with their underwriting practices. MAPS supports both macro (company) and micro (agency or underwriter) analysis of underwriting actions.

The Results:
Our client’s senior management can evaluate actions to better align policy coverage limits with the calculated replacement cost provided by their Millennium report. They can use that data to calculate premium gain or loss due to underwriting actions for the company.

At the same time, personal lines management can use cancellation and non-renewal data in assessment of individual agency performance. The by-policy detail of actions and the underwriting rationale provides a powerful tool for agency management. They can also use the data in performance assessment of staff underwriters.

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