By Kat Pregelj, GM of Underwriter Solutions, Applied Systems
The commercial insurance market in the United States is big, accounting for more than $500
billion in annual premiums. This represents nearly 2% of the US GDP, highlighting its crucial
importance to the economy. For independent agencies, commercial lines policies are often core
of their business, making up to 70% of their Direct Written Premium (DWP) and an even larger
share of their revenue and profit.
Despite the scale and significance, the process of submitting and underwriting commercial lines
is often wildly inefficient. It demands hours upon hours of time from both the agency and the
insured to collect and complete the necessary forms and documents. For larger, more complex
risks, finalizing submissions and getting them ready for rating and pricing can take weeks of
back-and-forth communication involving underwriters, underwriting assistants, account
managers, and producers. This cumbersome process leads to significant frustration for carriers,
agencies, and insureds alike.
Perhaps most notably, several of the largest insurance carriers report that up to 35% of
commercial lines submissions they receive are never reviewed by underwriters. The sheer
volume of submissions—combined with the time and effort required to assess and organize the
necessary information before the risk is ready for rating and pricing—makes it difficult to
process them all. Consider the immense amount of lost revenue and profit this represents for
carriers.
The industry has attempted to streamline this process in the past, employing strategies like
building comparative raters, reducing the number of questions asked in carrier portals, and
implementing other forms of straight-through processing. While these approaches have merit
and can potentially speed up underwriting, they sometimes come at the cost of decreasing the
quality of the underwriting. This can lead to inaccurate pricing, potentially causing a carrier to
lose desirable business or, worse, win a risk that has been underpriced, ultimately impacting
future loss ratios. These approaches also fall short for more complex risks that require
underwriter expertise and judgment and cannot be automatically priced using predefined
algorithmic rules.
The AI Opportunity: Data Extraction and Structuring
The latest advancements in AI present an opportunity to tackle the challenges agencies and
carriers face when writing complex commercial lines risks by enhancing existing processes and
making them more efficient. This includes embracing the current practice of completing
numerous forms – such as ACORDs, carrier-specific supplementals, loss runs, and schedules,
among others – and distributing them through traditional channels like email.
A fundamental capability AI brings is the ability to read and extract information from these
documents and emails. Utilizing the latest reasoning models, AI can transform what was
previously just a static PDF or excel file into structured and standardized data. With proper
tuning and training, these models can analyze well-structured forms and documents —
including handwritten responses and document images.
Submission & Underwriting Workflows: Unprecedented Collaboration between Underwriter
and Agent
Once all the information from documents, images, and other sources is extracted and
structured, this data can be leveraged for rating and pricing purposes. For submissions that are not easily ratable or priced using predefined algorithms—particularly mid-market, complex, and specialty risks—structured information extracted from submission documents is routed to the carriers’ system to quickly assess completeness, accuracy and appetite fit. From there, the underwriter can communicate directly with the agency partner through the platform, helping move the process forward.
If information is missing, the system flags it and allows the underwriter to send a message
directly from the platform. The message appears in the agency’s management system and
Outlook, making it easy for the account manager to respond quickly.
Beyond Extraction: Intelligent Submission & Underwriting Assistance
AI offers tremendous opportunities to enhance efficiency and intelligence throughout the
submission and underwriting workflows. Beyond just extracting data, AI can do much more:
- While forms are being completed, AI can supplement and verify the information being
filled out, providing unique insights for the underwriter. - When an underwriter receives a submission, AI can help find “look alike” applications,
giving the underwriter context on how similar risks were handled and how they
performed. - For agencies, AI can analyze submissions flowing through the platform to identify
carriers that have appetite for a specific risk. - Even the back-and-forth communication between underwriters and account managers
can be made more efficient as AI can help draft and automate the messages.
The AI-Powered Future of Commercial Lines
Embracing AI will not only streamline the process of submission and data extraction but will
also facilitate effective communication, risk assessment and underwriting decision-making,
enhancing efficiency, mitigating risk, and boosting revenues for agents and underwriters. As the
industry continues to innovate, agents and underwriters who embrace AI and digital
connectivity stand to gain better relationships with each other and ultimately, an edge in the
competitive insurance market.
