I’ll never forget the look on a Chief Underwriting Officer’s face when a design colleague interrupted him mid-sentence. Our meeting had started off plain enough – a few hellos, obligatory introductions, that well-timed ‘ask’ around priorities for the coming year. But as the CUO launched into a list of perceived operational issues, this simple interjection shifted the tone of our discussion entirely.
As businesspeople, we’re constantly encouraged to seek out and solve business problems. Is it a revenue or cost issue? Fixed or variable? Who hasn’t had a consultant walk them through that framework?
What if we took a moment and instead of talking about business problems, we talked about people problems? Who has the problem? What is their name? Their title on LinkedIn? What are they thinking? Saying? Feeling? Doing?
When our team first started Federato, we were stunned by the difficulties insurers faced in a changing risk landscape. Issues like natural catastrophe were especially hard to digest as we consistently saw insurers pulling out of markets proactively as prospects of profitability dimmed. In fact, according to Melanie Gall of the Global Institute for Sustainability and Innovation, the growth in uninsured loss globally is outpacing the rate at which natural catastrophe is increasing. When you start asking managers what’s driving these systemic issues, it’s not a long path to arrive at pricing, distribution, and risk aggregation – together, underwriting precision – as the business problem. But that’s often where the exploration stops and the solutioning begins. Build a better pricing tool. Re-evaluate the distribution strategy. More cat accumulation reporting!
We asked, what if instead we just took the time to talk to the people on the front lines, the underwriters who sit at the center of it all? And that is when we met Jamie. Jamie’s been an underwriter for just shy of ten years. She serves the middle market and handles specialty referrals for schools. She is obsessed with Game of Thrones. But lately, she’s spent a few too many weekends catching up on work; fatigue is setting in.
Most importantly, Jamie is a real person. Jamie has real problems. And there are thousands of underwriters like Jamie, who share her experience.
For Jamie, pricing tools don’t solve her issues – there are too many factors at play on each account. Her company’s new distribution solutions don’t help much either – a tool that helps her prioritize certain brokers for new business doesn’t make tough renewals with the ‘out’ brokers any easier. And while visualizations of her accumulations relative to catastrophe are helpful, they put the burden on her - “isn’t home office the one thinking about that stuff?”. One thing has become abundantly clear as we have gotten to know Jamie and her underwriting colleagues.
Nobody knows a book of business like the underwriter who owns it. But that same underwriter will tell you that they wish they had a better sense of what others were seeing out in the market. They’re looking for risk guidance to update dynamically in their queue so that they’re always seeing what’s in-appetite now, not what was in-appetite last quarter.
If you listen, underwriters will consistently ask for real-time market feedback on things like quote-to-bind ‘winnability’ so that they can better balance the trade-offs between their rate and retention goals. If their team is already ahead on a rate goal but slipping behind on retention, any underwriter would kill to be armed with that information, ‘give’ a little, and instead focus on building the relationship capital they’ll need in the future.
Through our Underwriter-First design process, we’ve identified the subtle wrinkles of when and where underwriters want information presented and how the pieces can come together across an organization. There is a clear and distinct call for systems that dynamically dance between portfolio risk and underwriting operations. At Federato, we call this new class of solutions, ‘Risk Ops’.
