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Keep me informedJuly 10, 2023 Max Deacon
The underwriter workbench vendor landscape has evolved over the last five years. The choice of third party vendors has grown significantly and in-house development has become less popular.
In this article we have used our insight from consulting engagements to describe the vendor landscape and we link to Magellan™, our insurance technology navigator, to highlight some specific vendor profiles. We also share our analysis on the kinds of vendors that carriers are choosing and highlight some of the architectural choices carriers need to make when selecting tools.
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Our analysis shows that the workbench vendor landscape divides into four segments. At one end of the spectrum we have generalist in-house teams building functionality. For third party vendors, we then see an increase in the level of specialisation on (re)insurance – starting with the low-code providers, who generally provide broad functionality, to highly specialist providers at the other end. Indeed, vendors differ in their focus on insurance vs. reinsurance; most of the vendors in the illustration below are focused on insurance and facultative reinsurance. When selecting tools, it is important to understand the focus of the vendor.
Figure 1: Vendor landscape segmentation
In-house teams generally build their own tools using a combination of pure code development and industry-agnostic development tools (e.g., Amazon Web Services, .NET, etc.).
Why choose this option?
If you have a large tech team with a broad range of development and product management skills, then in-house may still be the best option. Clearly, a bespoke build will create software most aligned to your needs – but in-house development costs are typically much higher than other vendor solutions. There are also significant risks of ‘reinventing the wheel’ and of creating long-term maintenance issues in terms of both cost and management focus.
If this is you, consider an in-house build:
Low-code vendors offer flexible platforms that can be configured by businesses to build their own tools (e.g., workbenches). Typically, low-code platforms are market agnostic, but many have some pre-configured components that accelerate implementation (e.g., an exposure management reporting module).
Why choose this option?
Low-code vendors often promise that non-technical executives can configure their own tools, but this is rarely the reality. In our experience, there is always a need for tight change management and governance around delivery, and sometimes even a need for bespoke coding.
Low-code vendors are a good solution for businesses that want a mixture of control and the benefits of pre-made capability. However, the functionality is not out of the box so stand-up times are typically longer than vendor-built tools and they do have restrictions on what can be developed which is where bespoke code would come in.
If this is you, consider a low / no-code vendor:
Example vendors:
Low / No-code providers: Case Study
Who? A Lloyd’s syndicate wanted to deliver an underwriter workbench that enables data-driven underwriting, drives process consistency across the organisation and enhances the operational MI available for reporting.
Problem statement
- Reliance on spreadsheets for critical underwriting activities such as workflow tracking and pricing
- Process inconsistency across underwriting classes of business leading to lack of proper governance and business control
- Significant manual data entry burden preventing the underwriting community from focusing on value-add activities
Results of implementing a workbench
- Consistent, clearly defined process and underwriting workflow with the ability to monitor and report on a risk-by-risk and underwriter-by-underwriter basis
- Single pane of glass to surface portfolio management and risk performance metrics
- Single user interface for underwriters to access all third party tools and solutions used within the underwriting process
Incumbent software providers such as policy administration systems (PAS) providers are increasingly offering workbench functionality, which can either be accessed through the core system or standalone.
Why choose this option?
These large vendors are industry experts. They often have decades of experience, which has some obvious pros and cons (e.g., market knowledge vs. some biases about how to do things best). Unlike low-code vendors, these vendors come with capability out of the box.
If this is you, consider an incumbent vendor:
Example vendors:
Incumbent vendors: Case Study
Who? A tier-1 commercial insurer working in the mid-to-large commercial market wanted to improve its underwriter experience and performance. The client also wanted to improve the customer experience, for example reducing internal referrals for submission-to-quote by empowering underwriters in branch offices.
Problem statement
- Reliance on ageing legacy technology environment and historic underinvestment in mission-critical systems and processes
- Significant business leakage caused by delays arising from slow internal referral processes between request submission and quote
- Underwriter attrition arising from the impression that poor processes hindered success, and poorly targeted reward measurement
- A Group target to double GWP over a 3-year period
Results of implementing a workbench
- Accurate data provided to underwriters at the point of decision, drawn from a single data source
- Large decrease in decision-making time for risk acceptance leading to a quadrupling in submissions being converted to quotes and a subsequent doubling of quotes being converted into written business
- A well-incentivised workforce with greater job satisfaction, better management of under-performers and targeting of training, with lower unwanted attrition
Specialists are often newer start-ups that focus solely on building workbenches.
Why choose this option?
These businesses enjoy the perception of being more cutting-edge, unlocking untold benefit in their clients’ businesses. Specialists – as the name suggests – often have a narrow focus and expertise (e.g., insurance vs. reinsurance) that needs to be considered, and there is usually a need integrate, for example with the PAS.
However, specialists are typically smaller than their incumbent competitors, which can spark concerns about longevity, experience and capabilities to support major transformations for enterprise clients who are used to ‘full service’ partners.
If this is you, consider a specialist:
Example vendors:
Specialist Tool: Case Study
Who? A global insurer wanted to find a way of becoming more agile, accurate and profitable by tackling legacy challenges and bottlenecks in its underwriting system.
Problem statement
- Data sprawl making it hard for underwriters to quickly access intelligent data
- Reliance on slow, inefficient manual processes to manage huge volumes of complex data for pre-bind activities
- Over-reliance on Microsoft Office tools for tracking and managing work
Results of implementing a workbench
- An insight-driven organisation that made better decisions faster
- An efficient data operating model, collecting data just once with seamless ingestion
- Standardised underwriting journeys enabling a clear understanding of risk, allowing focus on core work that drives growth
In our experience there is no one right answer for selecting a vendor. The choice comes down to the business and functional requirements, taste and risk appetite.
In our view the key considerations are:
Our analysis shows that most carriers have chosen either in-house or low-code tools. As specialist tools and low-code platforms mature we are seeing these becoming the most popular choices. We are also seeing a slight increase in enthusiasm for incumbents recently. We believe this is down to a gentle thawing of relationships between core vendors and market participants after a tough few years over covid where some vendors struggled with resources.
Figure 2: Oxbow Partners' analysis of vendor choices by London Market carriers 2023
Over the next 2-3 years we expect specialist tools to overtake in-house as at least the second most popular choice.
Underwriter Workbenches are often integrated into an existing and complex technology architecture. This means the workbench either relies on existing tools for functionality or is taking over responsibilities from others. This can sound like the sole domain of the technology team, however we believe underwriters need to be involved as the decisions can have an impact on the carrier’s ability to compete.
When looking at the architectural choices there are two dimensions:
Figure 3: Workbench architectural choices
Assessing the breadth and depth of the workbench requires a set of architectural decisions to be made. This includes considering various factors. For example:
Given the strategic nature of some of these factors, we strongly believe that underwriting and technology teams need to work together to systematically assess the options.
Underwriter workbench implementation is currently one of the most prominent technology decision carriers are making. Given that the vendor landscape and the architectural decisions are complex, we believe that clients need to consider carefully and strategically which option best suits them.
If you are looking for help understanding your options and selecting the best tool for your needs, please get in touch.
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About the author
Max Deacon, Principal
Max has joined Oxbow Partners from Oliver Wyman and is our lead on digitally-enabled transformation topics in specialty. His recent experience includes a multi-year process to build an end-to-end underwriting tech infrastructure for PE-backed London and Bermuda insurer/reinsurer.
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