According to a recent article in Property & Casualty 360 , last year the insurance industry had its best underwriting performance since the global recession. While underwriting performance still lags historical production, it is no doubt trending upwards. This is no small achievement when you consider that our industry has been challenged by 100-year catastrophic events and a period of moderate investment yields.
As I look at these numbers, I can’t help but ponder one burning question: how do carriers keep this momentum going?
If the industry has learned anything in the last five years, it is that the indicators that define strong financial performance have changed. It will take more than premium growth to persist and maintain underwriting performance. Carriers need to become even more judicious in how they manage their book of business – even during a time of increased risk and rate discipline. How much business a carrier writes will not be as important as the makeup of that business. It will continue to be incumbent on carriers to find the optimal balance between premium growth, capacity and risk.
There are several important steps carriers should take to position themselves to achieve this balance effectively. To improve underwriting performance, carriers should work to:
- Utilize predictive and adaptive analytics to fully understand the risk characteristics, account/channel relationship value and profitability measures that improve underwriting effectiveness;
- Provide underwriters with complete visibility into the value of the total account and guide them toward the high priority activities that drive the greatest value to your business;
- Improve channel management by creating a tighter link between sales and underwriting processes - leveraging every touch point to influence submission quality, risk appetite or product uptake.
Underwriting profitability was among the many hot topics at the ACORD LOMA 2013 show in Las Vegas this week, as you might know if you attended. We’ve identified it as an area that many carriers can target for improvements and further efficiencies in their operations. It’s also something we’re committed to – and we have dedicated significant resources toward, including a tailored solution, Pega Underwriting for Insurance.
What do you think Property & Casualty carriers need to do to improve their underwriting performance? Let me know - I’d love to hear from you in the comments below.