Underwriting: it’s the foundation of the whole insurance industry. That is why it’s so important for underwriters to make the right decisions. It is up to them, and nobody else, to ensure that a correct level of risk is entering the industry and that this risk is matched by the right premium. If this balance is lost, the industry faces a significant risk. Bad underwriting affects the whole industry with its toxicity. With good underwriting, everyone wins.
The best underwriters
The best underwriters all have a few characteristics in common. To carry out good underwriting, consistency is key. Underwriters need to look at each risk in a fair way and price it as reasonably as they can. This also means that they need to have a long-term view of risk, and occasionally they may need to have an open mind.
Many underwriters will automatically decline a risk simply because it is an unusual one. That doesn’t mean it’s a bad risk. Underwriters need the flexibility to sometimes classify risks that don’t fit into any one category.
A good underwriter also connects with people on a human level, and not just via email. Meeting with someone face-to-face allows an underwriter to better understand the risk and also the thinking and ambition driving it. This helps set the underwriter apart. Having that human connection with an underwriter makes them the first port of call when a client needs to have a risk underwritten. It also helps if the underwriter is very responsive. Even just dropping a quick note to tell someone you’ve received their submission can go a long way.
One last note on underwriting
While we’ve discussed the emotional, or ‘soft’ qualities of a good underwriter, the ultimate aim of a good underwriter is to balance risk with premiums. It’s important that underwriters always consider the losses and price premiums accordingly. There should also be enough money set aside to cover claims when they come in (because they certainly will!). At the end of the day, common sense prevails when underwriting. Underwriting is a huge part of the industry and bad underwriting can cause ill-health for the entire sector. So price things right, treat people well, and always cover your bases.