With underwriting discipline remaining one of insurers’ top challenges, it’s not surprising that the insurers in our survey ranked investment in training equally with technology as the most important areas in improving underwriting quality (figure 1).
FIGURE 1. When considering how to improve the quality of your organization’s underwriting, how would you rate the importance of each of the following areas?
Talent remains a major concern in underwriting. Insufficient training ranked third in our survey as the reason why technology increased underwriters’ workload. In contrast, most respondents believe their training programs are superior (figure 2).
FIGURE 2. How would you rate the current quality of the underwriting processes and tools within your underwriting division?
I see four reasons why training is such a high priority for underwriters:
- Emerging Risks: With the pace of globalization, technology convergence, and ongoing regulatory changes, underwriters are struggling to keep up in understanding the risk that any given account will face.
- Piecemeal Technology: Investments have been made in providing underwriters new capabilities, but these are often in piecemeal portions. UW are inadequately trained on the new capabilities, but also there is little thought onto the revised end to end process and the most efficient way to process them.
- New Roles: Many carriers are pursuing operating model changes that are looking to use underwriters play a more active role in business acquisition in addition to risk management. This change in expectation requires underwriters to have new skills they may not have today requiring new training.
- Cut backs: Across all of these different needs there is ongoing cost pressures have caused carriers to cut back on underwriter training. This is at the same time when UW’s are facing new risks, new technologies, and new expectations.
The industry focused most recently on technology and analytics solutions to supplement and support underwriting talent. Now, carriers need to expand their thinking and evaluate underwriting more holistically. To drive both underwriting efficiency and effectiveness, carriers need to look at their underwriting operating model, their underwriting processes, their talent and skills, as well as the training and tools to support them. Only by considering the challenges holistically will carriers get meaningful and measurable financial benefits.
Based on our work with insurers, improvements to underwriting training, processes, and talent can have direct bottom line results on loss ratios, book health and expenses. Innovative learning is a factor in both retaining knowledgeable underwriters and attracting new talent—a growth distinction for high performance insurers.
This is the final installment of the blog where we examine the results of our Commercial Underwriting Survey. I hope that you enjoyed the series and gained some insight into the crucial role of commercial underwriting. If you haven’t already done so, be sure to check out the podcasts on this topic, in which I explore other findings from the survey.