How to rise to the top of Underwriting ranks:
Some of the people I have mentored in my career have asked, How to rise to the top of the underwriting ranks. As underwriting was one of my skill sets, I did the best to help give true guidance.
My first advice for how to rise, was to become a Great insurance underwriter. Focus on what you can do to become the best, with the most product depth and add tremendous value to your organization, but then there were other skills needed (some of them softer skills).
The skills required to transform to a Great Insurance Underwriter
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Long term thinker –
- Prepare for the future. Learn as much as possible. Plan your goals, retirement and exit strategy. Forecasting the future as a profession requires a little foresight on your personal future.
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Goal oriented –
- Set your goals and hit them. That refers to professional goals and personal goals. Achieve everything you set your eyes on.
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Inquisitive
- The ability to take risk with confidence is based upon the questions an underwriter asks of the broker’s and insured’s applications.
- Asking questions build confidence. Taking the time and working hard to understand each individual risk is critical. As well as understanding the incentives and why customers/brokers need certain coverages is key. Underwriting guidelines from AM Best are a good starting point for questions and checklists, however, researching businesses will be required as competition is increasing and competitors are improving their analytics.
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Detail oriented
- the smallest details are the ones that can make the difference in managing risk and portfolios of risk. Failure to understand the details is recipe for disaster. In addition, Underwriters are expected to document these decisions and details so there can be organizational growth the following year, when the same risk is reviewed.
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Loyalty
- experience and loyalty with a company go a long way – having a proven track record means a lot for the promotions and rise of an underwriter.
- “Underwriter X has made $$M dollars over 5 years here, I think it’s time we give him an opportunity to help us grow Y platform”. Showing loyalty also commands loyalty from colleagues, producers, investors and customers.
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Lifelong learner
- Continuing education is important in the future of underwriting. Sometimes is can be as simple as reading the WSJ or Financial Times every day to build business acumen and understand various businesses/markets better. As the underwriting tools advance, so will your ability to understand analytic models and input/outputs. We are not saying everyone in insurance needs their MBA, CPCU, or CFA but advanced degrees and certifications will help you shine in your day to day role. See some of the top designations in insurance.
- It also doesn’t hurt to have any of the above as a resume & compensation booster. We have recommendations on top books for Insurance and top books for reinsurance here.
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Defined Risk appetite
- you will be required to define a personal risk appetite and market where you can make your company money.
- Stay within your risk appetite. Keep in mind, your personal risk appetite should be aligned with the corporate risk appetite; however, sometimes building a business plan around a new market or product is a good way to rise to the top. Make sure to have key metrics, data, capital requirements, limits profile, distribution plan, market competition, growth projections, and other important data driven facts in your plan so it is easier for you to get to YES.
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Analytical
- Along with being detail oriented, great underwriters must be very analytical. Sometimes the actuarial output provided isn’t using the right assumptions, has errors, you may disagree with the output, and you should have a methodology that helps your company make money as well as solves customer/broker problems.
- Understanding basic statistical concepts and corporate finance are minimum requirements to help so you understand model outputs.
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Decisive
- the ability to make a decision and move on to the next informed decision is critical. If you are getting caught up on past decisions, and cannot move forward it is analysis paralysis. Not suggesting getting scale in underwriting you need to make rushed decisions, but a decision needs to be made, documented, and evaluated in the future. Results can vary, and making decisions to get off renewals are just as important to writing new business.
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Technical skills
- understanding of insurance principles and civil liability system, as well as statistics, corporate finance, accounting basics and now with computer learning and the power of algorithms being introduced into insurance, I would focus time and efforts learning the basics of this technology based concepts as well.
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Win/Win mindset
- the underwriters who always say “yes” or “no” don’t always rise to the top. Having a sales focus is great, as long as you’re not giving away “fire-sale” pricing or terms, as well as “Dr. No” doesn’t write enough business to keep the lights on and build a well balanced portfolio. The blend of the two extremes is a required skill. Growing a portfolio consistently is much better than volatility in losses and unpredictable growth.
These are some of the skills but I think E&Y, did a good job discussing the future of Underwriting, which I will update the skills and post new articles around the future of this great career.
