North American New Business and Underwriting Systems 2016: Life, Health, and Annuity ABCD Vendor View

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6 May 2016


A review and ranking of the new business and underwriting vendor systems actively being used by life insurers in North America is presented in this report. Celent’s ABCD Vendor View is used to evaluate and rank vendors in four dimensions: Advanced technology, Breadth of Functionality, Customer base, and Depth of client services. An XCelent winner is chosen for each of the dimensions.

In the new report, North American LHA New Business and Underwriting Systems: 2016 ABCD Vendor View, Celent profiles 14 providers of new business and underwriting systems. Each vendor responded to a request for information. Seven vendors met the criteria for inclusion as a potential XCelent winner. The seven vendors eligible for the awards provided a demonstration and briefing of their billing solution.

Due to economic conditions that continue to have an adverse impact on life insurance application volumes, insurers have strong interest in reducing the cost of acquisition, processing and issuing life insurance applications. Automating the new business and underwriting functions is a critical component in reaching a level of straight-through processing (STP) for new business. Insurers hope that these systems will help reduce unit costs and improve margins. Celent believes that these initiatives are necessary to help the insurers address growth, service, and distribution mandates, in addition to reducing the cost per policy issued.

Developed almost 30 years ago, automated underwriting systems have become highly flexible in allowing insurers to define and configure underwriting rules and workflow. Most systems include or integrate into eApplications. Data from the applications drive reflexive questioning and identify risk classes associated with application data. They offer high levels of automation when gathering third party medical requirements and flag risks when the third party data results are outside the ranges set by the rules. They also can deliver decisions to the point of data entry or to an underwriter.

“The interest in automated new business and underwriting systems is on the upswing,” says Colleen Risk, a senior analyst with Celent’s Insurance practice and coauthor of the report. “The modern new business and underwriting systems offer configurable rules, evaluation of third party data, and sophisticated case tracking. Insurers looking for opportunities to reduce costs should consider the savings that can be obtained from automating the new business process.”

"The systems profiled in this report are capable of helping insurers automatically underwrite lower face value, lower age, non-medical products and middle market targeting products," says Karen Monks, an analyst with Celent's insurance practice and coauthor of the report, "But the age old concern about automating underwriting decisions lingers."