Insurers blame reinsurers. Reinsurers blame insurers. Advisors scratch their heads and other parts if they are ex baseball players or rock singers. When the world of risk selection took a turn for the worst everyone wanted to be seen as an innocent bystander. No one volunteered to take the heat for what seemed like chaos. We all want to circumambulate the issue. But has it gone away?
A prolix definition of the issue would not endear me to the advisor or underwriter so I will use limited verbiage to describe my view on the changes in underwriting. The following has lead to the environment for underwriting becoming far different than in the good old days. The following means frustration for those who distribute our products and our decisions. The following was not a conscious tactic or strategy by any one company or the industry.
Training of new underwriters appeared to come to a sudden end. Yes there has been the odd company training new underwriters but the “experience” side of their development lagged and the wise old sages took flight. Retirement, reading attending physicians reports at home, working as an anonymous consulting underwriter or just plain disappearing grabbed many a talent from the experienced pool. This hurt the mentoring process as well as depleting the wise counsel the advisor sought on the problem cases.
Salesmanship or simply building self confidence was not seen as essential as medical knowledge. It appeared we wanted our risk selectors to have the knowledge of the neurosurgeon but the delivery skill of a nerd without his/her tapped glasses. As I travel the globe I realize this is a global issue so do not feel it is unique to Canada. Courses or mentoring on how to sell your decision and communicate well are a rarity. Without that skill set the esteem of the advisor drops further as they say “the blathering idiot of an underwriter left them comatose” ( I myself would never refer to an underwriter as an idiot).
Prices fell. Requirements were minimized. Speed was the mantra of the day. Reinsurers struggled with the whole concept of auditing to determine what the benchmark perfect underwriting decision was. All that occurred without a master plan. Risk selection or categorization was almost an afterthought of the marketing visionaries. Low prices sell so service surely must be a distant second or third on the advisors’ “want list”. How many advisors would dearly like to see a higher price accompanied by almost guaranteed better service from the new business processors? How many companies could sustain better service? When one senior industry spokesman was heard saying that their 2006 service goal is “to be no worse than everyone else in Canada” I have to ponder the likelihood of real tangible service improvement.
Despite all the mergers and acquisitions there is a shortage of senior super underwriters even though there may be many waiting to get to that esteemed title. Thus we have advisors scratching there “whatevers”.
Is the worst over? I think it is, as a quiet calm develops between insurer and reinsurer as both agree on a reasonable middle ground forged by trial and error more than skill and diplomacy. As witnessed by a more realistic approach to foreign travel, when all put their mind to an issue a solution is found to any problem. Separation of clerical function from technical function is becoming paramount to empowering the underwriter to really manage the cases with issues attached. New management directives will apply limited resources to the problems and find simpler ways to handle the mundane in new business work flow. Senior executives are now leaning to service as the true differentiator since the price we charge has reached a low point bordering on the point of looking like it was derived by the unconscious incompetent.
I sense the worst is over but the communication shortfall has to be addressed if we hope to stay positive and hope that more underwriters do not disappear to run a shebeen in Ireland. Surely it has to be easier for an underwriter to talk with an advisor than manage the frequenters of a shebeen.