Actuarial and underwriting activities contribute significantly to a payer's operational effectiveness and financial performance. Payers can drive bottom-line improvements and increase market share by improving the consistency, sophistication, and accuracy of actuarial and underwriting processes, policies, and practices. Mandatory reporting requirements, consumerism, and new interventions, such as preventive care and disease management, complicate the process of developing a rating formula that accurately assesses the impact of this broadening array of benefit options and risk factors. Payers need to examine their underwriting guidelines to assure that they are applied consistently. They also need to track underwriting results and decisions to assess whether they reflect the right mix of risk factors.
Competition and margin pressures demand that actuarial and underwriting activities show improvement in organizational integration, data quality, pricing accuracy and consistency, product development, risk assessment, and management reporting. To accomplish these goals, payers are evaluating their actuarial and underwriting functions compared with industry standards and leading practices. In many cases, government regulations require independent, third-party verification of compliance with these standards and practices. Assessing current processes, tools, and controls benchmarked against industry best practices provides the foundation for a gap analysis and strategic plan to migrate to optimized processes and practices. Payers who can accurately rate and administer highly customized plans with a wide variety of benefit options will have a competitive advantage over payers offering less flexible standard products.
How we can help you
Because actuarial and underwriting functions are closely interrelated, PricewaterhouseCoopers' reviews and advisory services are conducted jointly by experienced actuaries and underwriters. Our experience advising the federal government gives us expertise in helping clients prospectively rate Medicare products such as Medicare Advantage and Part D. We can focus narrowly on your actuarial and underwriting functions or broaden our scope to include end-to-end processes including sales to close, product development, or financial management. We can help you assess your operational effectiveness in many key areas, including:
- Integrated actuarial and underwriting functions
- Risk assessment and risk management
- Metrics and reporting
- Pricing and rating methodology
- Book-of-business experience monitoring and new business selection
- Regulatory compliance
- Budgeting and forecasting
Based on these assessments, we collaborate with you to implement process improvements that include:
- Identifying gaps and feasibility for change
- Development of business cases and implementation plans
- Migrating processes and practices to the desired future state
- Updating pricing factors and methodologies
- Monitoring progress and financial impact
The financial improvement resulting from our review will depend on the effectiveness of your actuarial and underwriting functions today. Past reviews have had a documented earnings impact of 2 to 5 percent of revenue.
