Insurance carriers can accelerate manuscript endorsement processing and other policy document dissemination through some easy reengineering and technology process improvements.

1. Advanced Manuscript Endorsement Processing By streamlining and refining highly manual processes, insurers can enhance operational efficiencies and accuracy.
Executive SummaryWith stagnant markets and a rising expense ratio in the U.S. commercial insurance industry, carri- ers need an enhanced level of agility, flexibility and operational efficiency in their business pro- cess (see Figure 1 on the following page). Manuscript endorsements form a sizeable compo- nent of the policy packs and change endorsement documents (to communicate policy term chang- es made after the policy has been issued) for commercial risks. These endorsements con- tain specific terms or conditions that have been negotiated between the insurer and the insured which are applicable to a particular policy. Within commercial lines of business, there could be as many as 150 manuscript endorsements issued on a policy. Commercial insurers must issue these policies within the predefined service level agree- ments (usually 30 days within binding) with the broker/insured. Failure to do so can have conse- quences ranging in severity, from loss of business to imposition of penalties. Either way, the insur- er loses credibility and begins the new business/ renewal relationship on the wrong foot.
A large chunk (~80%) of commercial risk busi- ness is effective January 1st or July 1st, and the rush to get all manuscript endorsements drafted, approved and added to the policy within the stipulated time frame drastically increases the potential for errors. Underwriters must be extremely careful when drafting manuscript endorsements, because any ambiguity in the document can be interpreted adversely against the insurer. Numerous aspects of manuscript endorsements impact the art and science of drafting them. For example the word- ing on the manuscript endorsement itself should be consistent with the balance of the policy struc- ture. If a word appears in quotes within the policy to signify that it is a defined term, it is necessary that the same term, if used in the endorsement, also appear in quotes. Otherwise, the term in the endorsement may be interpreted by the courts as meaning something completely different, caus- ing serious dispute at the expense of the insurer. It cannot be overemphasized how often disputes arise over manuscript endorsements. • Cognizant 20-20 Insightscognizant 20-20 insights | september 2014

2. c 2 ognizant 20-20 insights
A defined automated process can make the pro-cess of drafting and approving the manuscript
endorsements more effective and efficient. Most
insurers are moving toward IT applications con-solidation and tightly coupled systems wherein
the print system is integrated with the policy
administration system. Accordingly, the sorting
of endorsements and placement within the policy
pack is driven by predefined business rules, with
underwriting assistants having no/limited oppor-tunities to make any changes. While well-defined
business processes and tightly coupled systems
make the policies and data more compliant, it pre-vents the user from applying “quick fixes” on the
policy documents. This limitation gives rise to the
need for the manuscript endorsement develop-ment process to be reengineered.
Remediation Priorities
Given these challenges, we recommend the fol-lowing fixes:
• Start early; don’t wait until the last minute to
work on the draft of the manuscript endorse-ments.
Commercial insurance lines have a very
high percentage of renewal business, and most
manuscript endorsements issued on renewals
use language similar to the expiring policy. The
compliance department can proactively review
the manuscript endorsements well before the
quoting process, and create rough drafts that
can be quickly amended immediately after
binding to address any customizations that
might have been made.
• Inject agility into the manual manuscript
processes. Since most manuscript endorse-ment forms are not filed, they are not prepro-grammed in the system or automatically picked
up by the underwriting assistants at the time
of policy issuance. Usually, the underwriting
assistants draft these manuscript endorse-ments in Microsoft products and then paste
them into blank forms that are preselected
and presorted within the policy pack. Copying/
pasting content into the print system could
cause multiple issues such as loss of formatting,
difficulty with comprehending images, etc.
A more agile business process can alleviate
this problem. If the business and compliance
teams can draft these manuscript endorse-ments well in advance (as discussed above)
and deliver them to IT business analysts imme-diately after the account is bound, the IT team
can potentially ensure that they are added into
the system while the underwriting assistants
register the policy. As the underwriting assis-tant reaches the stage of selecting the forms
from the system, the manuscript endorsement
forms would be developed and readied to be
picked up, making the entire process much
more efficient and effective.
• Use data analytics to determine how many
and what kind of manuscript endorsements
were issued historically on accounts and draw
similarities in their language for risks written
within the same industry. For example, there
many additional insured manuscript endorse-ments issued on a general liability policy.
One of the purposes of these endorsements
Figure 1
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
25
50
75
100
125
150
200
Total CL NWP ($bn)1
2012
2011
2010
2009
2008
2007
2006
CL Expense Ratio (%)2
26.6%
190.1
200.8 205.3
215.4 212.5
204.3
185.9 183.3
190.9
198.9
27.8%
28.4%
30%
30.4% 30.2% 30.1%
Stagnant Market and Rising Expense Ratios

3. cognizant 20-20 insights 3
is to include the additional insured within
the coverage as identified on the declaration
form, keeping the limits of insurance intact.
Usually, generic wording is used for this type of
manuscript endorsement, and this can poten-tially
be reused on all policies written within a
specific industry, where inclusion of additional
insureds may apply. Manuscript endorsements
can be filed and assigned an internal form
number to be reused on several policies.
• Share resources and create consistent
business processes across lines of business
and products to create operational effi-ciencies.
Create a common repository of
manuscript endorsements that can be shared
by users across different business units regis-tering and drafting policy packs. Implement a
consistent business process for underwriting
to assign an internal number to manuscript
endorsements that can be used across multiple
policies, and establish easy reference criteria
for others to identify them.
• It is imperative for underwriters to review
the manuscript endorsements drafted by
someone else (i.e., underwriting assistants)
before it is issued to the broker/insured. To avoid delays, there must be a seamless
process of drafting, approving, assigning a
unique internal number and entering them
into the system in time for a user to select
them — all while the policy pack is being
created. A workflow management tool with
automated mail triggers and reminders for
document approval, testing, availability for
usage and automatic upload for IT implemen-tation could help create a lean, effective and
efficient operating model.
Looking Ahead
A quick review of historical operational metrics
can help the insurance carriers gauge wheth-er
there have been consistent delays in getting
policy documents out to brokers/clients. While
manuscript endorsement processing might not
be the only cause of the delays, application of
an accelerated, streamlined manuscript endorse-ment processing will definitely help bolster the
process. A good place to start is a thorough review
of the end-to-end policy documents issuance pro-cess, with a focus on workflow administration,
various technology platforms’ integration points
and internal users’ roles/responsibilities.
Some easy-to-implement process reengineer-ing
and technology upgrades can significantly
reduce the potential perils of drafting and issu-ing
manuscript endorsements and can increase
the speed-to-market for policy packs and change
endorsement documents, resulting in an overall
enhancement of customer service.
Footnotes
1 NAIC.
2 Conning, Commercial Lines Industry Forecast.
About the Author
Shishir Narula is a Senior Consultant within Cognizant Business Consulting’s Insurance Practice. He
specializes in commercial insurance underwriting and policy administration for workers compensation,
auto, general liability and excess lines of business. He holds an M.B.A. from Institute of Management
Technology (IMT), Ghaziabad and a bachelor’s degree in engineering from Indraprashtha University,
Delhi. Shishir also holds certifications from the American Institute for Chartered Property and Casualty
Underwriters (AICPCU). He can be reached at Shishir.Narula@cognizant.com.

4. About Cognizant
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