Personal Insurance Underwriting – A Lost Art

According to Wikipedia, “Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that risk.” Oh- but if it were only that easy! Measuring risk exposure is very different now than it was even ten years ago. As an Insurance Agency, are you considering how you measure risk in order to grow your business in the most profitable way possible?

  • Comparative Raters: The single most destructive tool to the art of underwriting! If a company has the cheapest price, they must “want” that business- right? Wrong. Companies must file in personal insurance with the Dept. of Insurance for that state to update rules or pricing. With the speed of information today and the speed of competitor changes, most companies have great difficulty keeping up with changes in the marketplace. Especially in light of the fact that they have to “file” to make changes to their products and pricing which can take months and requested changes don’t always get approved.
  • Carrier Appetite: If you’re an Independent Agent, you’re probably doing business with way too many markets. With changes coming from carriers almost on a weekly basis nowadays- how can you or your staff possibly be knowledgeable about what all of your carrier’s appetites are?
  • Auto Insurance has become commoditized: It’s our own fault; the industry now advertises this product especially on television commercials as only being differentiated by price. That is far from the truth. Contracts vary wildly and companies have specific appetites for certain types of risks.
  • Meeting Expectations: Underwriting is a two-way street. You should be “qualifying” the risk to match a carrier’s appetite but also matching the consumer’s expectations of what is important to them about their insurance program to which carrier will best provide that.
  • Failure to Communicate: There are way too many “Insurance Professionals” assuming that price is the most important consideration to a client when choosing a personal insurance program. You know what they say about assuming…
  • Insurance Interrogation: Yes- we need a certain amount of information to analyze a risk. Think about how you are asking your questions and are you explaining why you need the information?
  • Seller Beware: Consumers are extremely savvy today about what they should say to get the coverage they want. They may no longer “own” Spike, the Pit-bull after talking to a few insurance agents and are finding themselves unable to get homeowner’s insurance.

Underwriting a risk still involves developing a relationship with a prospect and matching their expectations with a carrier that has an appetite for their risk profile. Can you do that and properly analyze the assets your prospect may have “at risk” in 71/2 or 15 minutes? Is it worth taking the proper amount of time to profitably grow your business and do the right job for your clients? It’s up to you.

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