In 2009 we wrote three articles on developing and maintaining underwriting manuals (a subject SelectX is close to given our experience of creating and maintaining a number of manuals over the years). Time, then, to look at some current issues.
Keeping the manual up to date
A manual is not a ‘launch and leave’ project and can quickly become out of step with changes in the wider environment such as:
- Legislative changes (for example the forthcoming restrictions in Europe on gender in risk pricing)
- Product changes such as improvements to critical illness definitions; because these usually widen the cover being offered changes to underwriting philosophy may be necessary – some applicants may even be no longer eligible for cover because they already qualify as a valid claim
- New or different information becoming available, whether as a result of a change in underwriting practices or the availability of new laboratory assays
- Competitor activity.
In our first article on this subject in February 2009 we suggested that all manuals sit somewhere on the diagram below. We do not think this has changed much other than to say that some reinsurers – for typically they are the manufacturers of underwriting manuals – keep their products up to date better than others. While this diagram is still as valid as it was two years ago, the pace of change has increased.
Technology changes at a very rapid pace. Software is updated almost continually and new versions of familiar packages come thick and fast. One is constantly bombarded by messages to install the latest versions of software packages such as iTunes or Flash. Most manuals these days are made available to users over the Internet but this can bring problems from time to time as browser technology does not stand still for long.
Internet Explorer (IE) 6 was originally released in 2001 – which makes it rather an antique in software terms. But it survives, often to provide headaches to developers of websites, and of underwriting manuals too. Various statistics suggest that the end is nigh for IE6 and that as little as 1% of Internet traffic uses it. But in the corporate world there are companies that are slower to upgrade than personal users and in countries such as China and South Korea it retains a significant presence, perhaps as high as 25%.
Different browser behaviour, such as IE compared with Firefox, and the emergence of new versions of a given browser, can give manual developers (and maintainers) nightmares. For example, IE8-compatible functionality is unlikely to work in IE6, giving rise to serious content display errors. This is becoming increasingly an issue as more users work from home, using a number of versions of IE or its alternatives. Thus testing has to be done on various versions of various browsers, adding to the cost of development.
Manual providers may come to the point where they find it impossible to support older browser versions or IE alternatives but, unlike software companies dealing with individual consumers, may find it difficult to say they no longer support XYZ browser.
Thus it is so easy for a manual to lag behind the pack and lose credibility with users when updates to the platform are infrequent and/or irregular. And of course content needs to be maintained and updated too. In 2011 SelectX undertook an underwriting manual usage survey with participation from over 200 respondents in every major insurance market throughout the world. By and large the survey confirmed our views:
- Insurance companies do carefully monitor the content and the extent of innovation in manuals; what they find does impact on their relationship with, and view of, reinsurers.
- A maintenance and development program for a manual, covering content and functionality, is essential.
- Once a manual becomes out of date it is difficult to catch up. Carriers look to their reinsurers for guidance and if their expectations – influenced by competitors’ offerings – are not met then credibility may be lost.