Why is straight through processing important in life insurance underwriting? Before you try to find an answer to this question, you need to understand what straight through processing implies in the life insurance sector. You also need to find out how it differentiates manual and automated underwriting.
What is straight through processing (STP)? The concept of STP in insurance is nothing new. However, if you are yet to u7nderstand the significance of the concept, you need to find some details first. Only when an insurance transaction is completed with straight through processing, will it be possible to reduce time and cost.
The objective of STP is to ensure the completion of the insurance application transaction in as little time as possible. However, along with speed, the accuracy of the matter also matters. Delivering fast and accurate insurance application processing is possible only when no, or minimal, human intervention is involved.
Only automation of the entire underwriting process can achieve straight through processing in insurance. When you automate the underwriting process, or at least some part of it, you reduce the time and cost wasted on the repetitive, valueless tasks associated with underwriting. Moreover, automation also reduces errors and inconsistencies.
How is manual and automated underwriting different? In a manual underwriting setup, the application goes through a number of steps that involves a number of underwriting professionals working at different levels. If the application involves complicated matters, it takes even more time and effort to reach a decision.
On the other hand, automated underwriting may or may not involve any manual intervention. If you decide to automate the entire process, the system acquires necessary data from the application. It works on set rules to assess risks and issue a policy that corresponds to the risks [presented by the applicant.
As the decisions arrived at by the manual underwriting process depends on the knowledge, skills and efficiency of the individual underwriters, the chances of inconsistencies are high. Moreover, the necessity to key in data at all steps enhances the chances of errors as well. With automation, it is possible to avoid these problems.
Is straight through processing necessary for the insurance companies? Today’s world operates at a very fast pace. Everyone seems to be in a hurry. Automation of the life insurance risk assessment ensures that you do not fall behind in this race. STP ensures the delivery of fast results to customers, which is important for insurance companies.
Moreover, when you automate insurance underwriting, you become capable of delivering accurate results. The chances of errors and inconsistencies minimise when you utilise the underwriting rules engine that you set according to your products, policies and procedures. Enhanced competence is necessary to stay ahead of your competitors in the field.
Think from the point of view of your customers. To them, the ease of availability of quality products and services matters most. If you take weeks to complete an insurance application processing, they will not be interested in it, even if it is accurate. You need to focus on the time as well. Only straight through processing can achieve this goal.