27 July 2020 Insurance

Driving mid-market success through underwriting productivity

Technology and data have long been lauded as drivers of competitive advantage in insurance. But, as the saying goes: “People don’t want a quarter-inch drill. They want a quarter-inch hole.”

“Thanks to the maturity and proliferation of technology such as AI, insurers can  augment, filter and prioritise submissions to achieve real productivity gains.”

When we speak to our customers and other execs in the industry today, it’s clear that they’re not looking to invest in technology for technology’s sake. Instead, they want to use technology as a means to deliver a better insurance industry, defined by giving value to the customer and driving efficiency across the value chain.

Time and again, we hear that productivity is a key driver for innovation today. As research published by McKinsey in June 2019 shows the gap widening between the top performers in insurance and the rest of the industry by economic profit, it’s no wonder that underwriting productivity has become a strategic focus in 2020 and beyond.

Until now, insurers have been caught in a bind: investment in growth hurts expense ratios; expense reduction hurts growth. Today, insurers can resolve this false trade-off between growth and cost. In fact, with the right productivity-enhancing technology in place, those that succeed in the industry should be able to manage twice as much business for half the costs, according to EY.

Here’s how insurers can make underwriting productivity a priority and drive tangible progress.

Prioritise underwriting productivity
Underwriting productivity is key for insurers looking to win in the market, and today it is more important than ever.

However, McKinsey research published in August 2019 has found that the insurance industry as a whole has not prioritised productivity in the past, and expense ratios for many carriers have increased. This is in stark contrast to other industries such as commercial banking and telecoms, where cost efficiency has improved.

This continues to hinder the ability to expand the underwriting appetite and the total addressable market, particularly in commercial insurance where expense ratios rose from 34.1 percent to 40.8 percent from 2013 to 2018 ( EY 2020 UK Insurance Outlook).

To break the impasse between profitable growth and cost, insurers must intelligently differentiate the risk upstream. Then, they can drive straight-through underwriting for simpler risks, while prioritising underwriting productivity for more complex risks that require human underwriting.

The goal is to significantly reduce the marginal cost per new bound policy—for example, by enabling underwriters to quote and bind 30 percent more risks by reducing cycle time per submission. The major opportunity exists in the mid-market, where profitability is likely to endure in the long term.

Overcome productivity challenges
The way the industry works today means it is difficult for underwriters to be productive. Many underwriting operations remain inefficient, with considerable time and effort still required for lower value, manually-intensive tasks, for example, checking multiple third party websites to check whether a submission is inside or outside risk appetite, or a lack of intelligent prioritisation applied to across submissions, which have starkly different lifetime value.

According to a February 2019 report from McKinsey: “Anywhere from 30 to 40 percent of underwriting’s time is spent on administrative tasks, such as rekeying data or manually executing analyses.”

Overcoming productivity challenges like these gives underwriters the opportunity to reinvest time and effort into making better risk decisions and deepening their relationship with key brokers to improve conversion rate. This can drive profitable growth, while reducing both the expense ratio and the loss ratio.

Technology to drive productivity
Technology is set to drive real productivity gains in insurance and help underwriters overcome some of these challenges.

In a webinar with Intelligent Insurer, Paolo Cuomo, director of operations at Brit, told us that “as a result of artificial intelligence (AI) and machine learning, there is a decent chance of being able to do something in an efficient manner today”.

As one example, using a system which prioritises high-value submissions has the potential to drive significant productivity gains. If insurers can focus underwriter time on the most important submissions, with the highest lifetime value, it’s possible to drive an average increase in lifetime value of 20 percent.

Underwriters can reduce the time spent on manual tasks by using AI to automatically augment the broker submissions they receive with accurate risk data. This enables a reduction in underwriting cycle time, which enables underwriters to increase the number of submissions they can quote and convert per week.

Thanks to the maturity and proliferation of technology such as AI, insurers can augment, filter and prioritise submissions to achieve real productivity gains—and will see a subsequent positive impact on expense cost as a percentage of gross written premium.

Next-generation underwriting
Until now, insurers have faced a dilemma: investment in growth hurts expense ratios; expense reduction hurts growth. Today, insurers can resolve this false trade-off.

According to the August 2019 McKinsey report: “Insurers that have relied on traditional approaches to raise productivity haven’t generated the expected results.” With clear opportunities to improve underwriter productivity thanks to the maturity of technology like AI, we’ll start to see insurers break the relationship between growth and cost base.

By automating manual tasks and driving accuracy and efficiency in other areas, underwriters can process and win more submissions, while focusing time on tasks such as relationship building—the high-value activity a machine cannot do.

This means better experiences for brokers, growth opportunities for insurers, and fairer prices for end customers—driving combined ratios down and increasing productivity-led growth. A productivity step-change is on its way, leading the way for next-generation underwriting.

Richard Hartley is the chief executive officer of  Cytora. He can be contacted at:

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at or Adrian Tapping at

More on this story

26 May 2020   Insurers are at a crossroads as AI drives industry evolution. Richard Hartley, CEO of insurtech Cytora, outlines the areas to watch as things progress.
21 May 2020   AI offers the opportunity to boost the skills and value of underwriters as it ‘rides sidecar’ to people, providing on the job learning, says Richard Hartley, CEO of insurtech Cytora.