Underwriting by its very nature is a dynamic business, requiring constant change, refinement and human judgement, particularly so in more complex personal lines cases and in commercial lines of business. Unfortunately, while the broker community will always provide a robust view on an underwriter’s performance, very often the convenient excuse is that their IT systems are the problem.
Underwriters know that not all brokers are equal. Segmentation strategy both in the makeup of their portfolio and the mix of brokers is a key part of an underwriter’s strategy. At the beginning of the year, underwriters will be clear on what they want their portfolio to look like at the year end. Equally, they will know which brokers they want to produce this business. Whether they hit their target depends on two things: how they behave, and the systems they employ throughout the year.
The problem begins with the conflict between the drive for growth in the sales channel and the underwriter’s capacity and performance. Underwriters want to win the right risks with the optimal products at the best price and margin. However, they are faced with a market full of brokers with a sea of risks all clamouring for attention and demanding the best price. By automating the filtering process based on rules directly reflecting their strategy, the underwriter can generate opportunities for the business that they want to write. By allocating the right underwriting resource at the right time to the best cases in the right segments and geographies from the most valued brokers, underwriters will maximise profitability in the right lines of business and meet their targets. Similarly, they can improve acceptance rates, product effectiveness and pipeline quality, while simultaneously reducing cycle times and case throughput.
However, IT applications have traditionally served underwriting badly, providing static processes and hard-wired facilities. Evidence shows that both brokers and underwriters want to be out in the market closing business using their experience and judgement based on solid presentations and supporting information. Brokers want easy access to underwriters with expertise and flexibility who are empowered to make decisions. Unfortunately underwriters find themselves squandering their productive time making up for the shortfalls in their underwriting systems, which are little more than number crunching admin systems, and playing catch up to deal with an ever increasing demand on their most limited resource – their most talented people’s time. Whether it’s speed to market, underwriting consistency, improving conversion ratios or reducing expenses, underwriters need a more flexible environment to support their efforts to address the conflicting pressures which impact the business’s ability to grow profitably.
But the ability to deliver the right supporting technology is here for the most forward-thinking underwriters, and that leads us to the second issue – behaviour. With the technology issue sorted out underwriters will have no excuses about addressing their behavioural issues. There will be no hiding place from the broker who asks why, after they commit to a close relationship, to get a real understanding of their client’s needs and put together a killer proposition for their client, they get the same pricing as “Joe cheap”, the broker down the road. Dual pricing and no-bidding will have to become a strategic part of the underwriter’s armoury, and if they don’t deploy it, the reasons will be obvious.