Choosing the Best Policy Admin and Underwriting Platform for Specialty Carriers

Policy Admin for Specialty Lines

Specialty Lines are one of the fastest-growing lines of business. A report from S&P Global Market Intelligence noted that the growth rate of US excess and surplus (E&S) direct premiums rose 14.5% in 2023, down from the peak year-over-year increase of 32.3% in 2021 and 20.1% in 2022. This growth can be attributed to the rise of non-admitted insurance products and MGAs as a distribution channel for specialty carriers. 

A key enabler for the growth of specialty line carriers is technology, since non-admitted lines can take on risks that traditional carriers may not have the appetite or expertise for. Traditional policy administration systems used for personal or commercial lines lack the flexibility and unique product setups that specialty lines carriers require.  

Specialty Insurance Underwriting   

The risks that underwriters at specialty carriers and MGAs take on are non-traditional in nature and have complex loss exposures. As a result, underwriters need to take numerous risk factors into consideration, resulting in an extensive policy review process. In the case of MGAs, submission workflows can become complex if the capacity providers or carriers require a form of delegated authority to review high-risk submissions from the MGA 

For example: For example, specialty carriers may create a referral trigger for MGAs. If a submission crosses a certain limit or has a certain risk, the submission must be approved by the MGA's underwriting team and the carrier's underwriting team. 

Rating for Non-Admitted Products

Since specialty lines products are not subject to traditional pricing and rating, carriers need to manage their rating independently within their core systems or as a separate business rule engine. This can be a task that requires a significant IT effort for specialty carriers that usually have lean IT teams.    

Automated Submission Intake 

Effective submission intake software for specialty underwriting teams is crucial. Since specialty carriers receive submission documents in unstructured formats from their distribution partners, underwriters must manually rekey the data into their policy administration system. Moreover, since the forms are also complex, there can always be constant back and forth between agents or brokers and underwriters about incomplete submissions and missing information. 

How should specialty line carriers think about their technology choices? 

It is imperative for specialty line carriers to invest in systems that enable them with the modularity and flexibility that non-admitted lines demand. They should focus on low-effort IT systems that can empower business users and IT analysts to perform day-to-day activities. 

What is the Best PAS Insurance System for Specialty Carriers?  

Core System Modernization Approach 

Since many specialty line carriers have already invested in a homegrown system or a traditional policy administration system, they should be able to retain the investments made in their existing systems. This could be done by externalizing the product and underwriting layer to a separate middleware layer like Insillion that includes a low-code insurance product configurator and underwriting workbench. 

A modular solution like Insillion that is microservices-driven makes it easier for carriers to gradually introduce new components such as workflow automation and third-party risk data into their existing systems. 

Submission Intake Software For Specialty Underwriting Teams  

Specialty carriers can also invest in standalone submission automation platforms that convert new business submissions consisting of spreadsheets and PDFs into a structured and validated quote-to-bind journey. 

Choosing Between Specialty Insurance Underwriting Platforms: IDP vs. Automation 

Among the solutions available in the market, many carriers may choose to adopt horizontal Intelligent Document Processing platforms that perform data extraction and contextualization from submission documents, because specialty lines have non-standard forms, some carriers are looking to customize IDP platforms to the needs of their specialty product.  

But these standalone platforms stop at data extraction and contextualization, while submission automation platforms like InFlow by Insillion go further and provide AI-powered triage for underwriters to identify high priority cases and enrich submissions with third party risk data for validating underwriting rules. When Submission Automation platforms come with built in underwriting guidelines and insurance related contextualization such as submission routing, this provides a massive value add for specialty line carriers.  

Moreover, since the majority of the business for specialty lines carriers is presented by agents and brokers, many carriers are investing in building digital platforms for distribution partners. These platforms create efficient digital workflows for specialty insurance, which can be co-branded agent / broker portals which can be extensions of the carrier's submission automation platform so that distribution partners do not have to perform extensive manual data entry.  

Essential Software for Specialty Underwriting Teams: Underwriting and Rating  

Since specialty lines focus majorly on niche products, they rarely go through, straight-through processing, all of the incoming submissions are assessed by underwriters. These underwriters have specialized risk knowledge, but carriers still need to maintain underwriting consistency. 

Specialty Underwriting workbenches like Insillion help carriers achieve this by enforcing underwriting rules that validate the type of submissions that can be accepted, for example, only accepting submissions that fall into a certain geographic region. In the case of Environmental/Pollution Liability product, only certain zip codes can be accepted by the carrier based on their risk appetite and portfolio. These zip codes can be defined by underwriters and business teams using low code configurators. 

In the case of rate management, carriers operating in specialty lines are not subject to the same number of regulations as admitted carriers; they have the flexibility to design their own rates in accordance with state compliance. Utilizing their existing core systems to maintain rates for their complex and niche products can make it time-and resource-intensive task. API-enabled policy administration systems like Insillion, make rate management a low-code driven task where IT analysts and business teams can manage changes to rates using a low code configurator. 

This rating engine comes with a maker-checker model to ensure that only those with authority can make changes. Furthermore, these changes are a part of the built-in audit trail. 

Why Specialty Line Carriers Need a Flexible PAS 

The products designed by specialty lines carriers are not similar in the structure of traditional insurance products. They could involve complex underwriting rules, rating structures, data ingestion, and enrichment that are not found in traditional insurance products. In some cases, specialty carriers might also be working alongside specialty MGAs to distribute their products. In those cases, they would require referral triggers, an underwriting review portal, and underwriting limits on the operations of the MGA. 

Conclusion 

The specialty insurance market's continued growth presents a clear opportunity for specialty carriers. Capitalizing on this requires moving beyond the limitations of traditional systems. Investing in a modular, low-code policy administration platform like Insillion makes it easier to manage niche products.