Straight-Through Processing in Underwriting and Claims


Straight-through processing (STP) is often among insurers’ top goals for leveraging technology to improve efficiency for property/casualty and life/annuity/benefits insurance.

STP offers insurers benefits in speed, consistency, and productivity, enabling them to support greater transaction and application volume without increasing headcount. Automated resolution of simple business frees up experienced underwriters and claims adjusters to focus on more complex cases. It can also improve customer experience by providing fast decisioning and more streamlined digital experiences, which help insurance apps stand alongside those offered by banks and other companies.

Thanks to steady insurer investment in better third-party data and modern core systems, STP is becoming more common in insurance underwriting and payment processes. This is most notable in lines which tend to be commodified, under cost pressures, or sold directly, including personal lines, individual life, annuities, and some small commercial products. These lines hit a sweet spot for STP where several interrelated factors combine to make it feasible and desirable:

  • Risks are well understood, which makes modeling easier.
  • Data is easily accessible and generally reliable.
  • Speed is essential in order to be competitive.
  • Margins are thin, which means productivity and volume drive profitability.

STP rates in lines that don’t correspond to these characteristics, like standard commercial and specialty lines, are also on the rise, although for these lines, STP tends to be focused around specific, tightly defined products where insurers’ experience gives them deep knowledge of the corresponding risks.

Enabling STP, and investing in the technologies that support it, has benefits beyond just allowing fast and reliable transactions. Human underwriters and claims experts can use third-party data that will also feed an algorithm, and distribution partners will appreciate the digital channels that support easier transactions. Even the process of creating the business rule framework or algorithms that determine if a policy or claim can be processed straight through has value in forcing insurers to truly understand their rating factors, workflows, and data.

Aite-Novarica Group’s new report, Straight-Through Processing in Underwriting and Claims: 2023 Update, tracks STP and digital claims payment rates for seven major insurance lines of business and provides an overview of technologies insurers have applied to enable STP. It updates our 2021 report on the same topic.

Insurers can use this report to benchmark their own STP and digital claims payment rates, and solution providers can use it to understand the extent to which insurers have automated these lines to better target prospective clients. Read the full report to learn more on developments in this area, and please reach out to me at [email protected] with any questions.