- By Daniel Smith
- Published 04/23/2012
Understanding the straight through processing (STP) is necessary to realise the way automating underwriting proves advantageous for an insurance business. It involves the smooth flow of transaction in the process, from the point of origination to completion. Automation, integration and validation are possible with the use of a single solution from the point of entry through the entire journey of the transaction.
The convergence of insurance and financial services makes it essential for introduction of STP in insurance. This is especially important as the need for exchange of real-time data across the organisation as well as with the external agents because of increasing demands. What are the drivers that make it necessary to introduce this in your insurance business? Here are the details of the business drivers.
- Streamline operations like application processing
- Introduce customer focused processes
- Eliminate paper-based processes
- Automate and optimise business processes
- Decrease manual processing to save time and prevent errors
- Increase volumes of transactions
- Integration of data after alterations like mergers and acquisitions
- Offer real-time data and updates
- Ensure scalability to accommodate more partners
However, there are certain challenges that STP implementation faces.
- The existing IT systems build around applications designed to focus on data, instead of on business processes, and accomplish one function only
- The strict regulations within which the insurance industry operates as well as the regulations which affect related financial institutions
- The insurance industry has an inclination of being averse to risks
- The dependence on paper-based processes implies a waste of time and resources as well as makes it prone to errors and inconsistencies
- The application processing time is quite long; the gap between sales interests to policy issuance is quite considerable
Automating the underwriting process is capable of overcoming these challenges and achieving the right results. When you are selecting the underwriting system for your insurance business, you need to keep in mind certain points.
Consider the ease. If the system is too difficult to implement and use, it would not be able to serve its purpose. You need an automated underwriting solution that is easy to install and requires minimum training for use.
Consider the effectiveness. The system needs to cater to the specific purpose of your insurance business. Effective automation, whole or partial, is necessary to ensure that the system achieves its objectives.
Consider the flexibility. If the system is incapable of modifications as per the changing needs of your business, it would become redundant in a few years. Make sure you choose an automated solution that adjusts according to the changes in your business.
Today’s competitive market does not make it easy for an insurance carrier to achieve success. Just the right pricing would not be able to obtain profits in these circumstances. Opting for the right automated risk assessment and underwriting solution is necessary to ensure that you save time and efforts, cut down costs, use resources to the optimum and increase customer satisfaction and enhance customer retention.
Daniel Smith is a professional underwriter. He provides tips and suggestions for incorporating straight through processing in insurance. If you were looking for more details rapid issue insurance underwriting, he suggests you to visit http://automation.munichre.com/for further information.