Commercial underwriter in a box?; Market, industry and technology changes are prompting more use of automated systems.(AscendantOne Inc., Caliber One Indemnity Co., ePolicy Solutions Inc.)

Automated underwriting, which has been used in personal lines for several years, is starting to make inroads into the commercial lines sector thanks to a maturing technology.

The hard market also is prompting the use of automated underwriting because many insurers, having downsized to trim expenses during the soft market, now lack sufficient in-house underwriting expertise to handle the deluge of new applications coming in. Furthermore, many of today's insurance company underwriters have never experienced a hard market.

However, while the use of automated underwriting may help insurers play catch-up now, and even ensure lower expenses when the market turns soft again, insurance industry experts say it is unlikely that technology will fully replace human expertise.

``There have been versions of this out there for a long time,'' said Ann W. Spragens, senior vp for public policy development and general counsel to the Alliance of American Insurers in Downers Grove, Ill. ``The concept actually is not new.''

``We've seen this in what they call the `Rapid Rater' for automobile insurance that's been around for a couple of decades,'' she said. ``It takes some of the general elements that an underwriter would apply to any risk, and it automates the data evaluation process. For homogeneous products, for commodity-type products like personal lines, it's relatively simple to do.''

Automated underwriting ``has been in existence for 20 years in some rudimentary ways on the personal lines side,'' concurred Don Griffin, …