Study 10 – The Underwriting Temperament
1. What personal qualities or characteristics tend to be held in common by underwriters who succeed in and enjoy their work? (p. 2-3)
With due allowance for the wide variations I personality among individual underwriters, we may broadly describe the shared set of personal qualities or characteristics that make them successful as “the underwriting temperament.”
A partial list of such personal qualities or characteristics might include the following:
· Curiosity
· Positive attitude
· Adaptability
· Motivation
· Creativity
· Customer focus
· Decisiveness
· Empathy
2. What phrase is used to describe the importance of curiosity to an underwriter? (p. 3)
The power of “why.”
3. Why is it essential for an underwriter to strive to gather as much information as possible about a risk? (p. 3-4)
In light of the uncertainty that surrounds the underwriting decision, the underwriter’s job is to make not the right decision but the best decision under the circumstances.
To make a better decision, an underwriter needs more information than will allow a merely adequate decision. To make the best decision, the underwriter needs as much information as time and circumstance will allow him/her to collect. A good underwriter accepts internal and external constraints on his/her ability to make decisions only when curiosity has led him or her to understand them as thoroughly as possible.
4. Explain the connection between uncertainty and stress. (p. 4-5)
People suffer less from stress when they feel more in control of their lives. They feel more in control of their lives when their environment is more predictable; less uncertain.
5. Why should an underwriter avoid an overly negative attitude toward risk? Why should an underwriter avoid an overly positive attitude toward risk? (p. 5)
The easiest way to avoid loss is to avoid risk by declining an undue number of risks or demand terms so restrictive that an unduly small under of risks is accepted. The difficulty is that such an essentially negative attitude to risk may over time lead brokers to tender submissions to other underwriters with other insurers in hopes that one of them will be more receptive. As a result of the underwriter’s negative attitude to risk, the insurer might suffer reduced premium volume and lower profits, even if the risks the underwriter does accept are profitable.
An unduly positive attitude can be as counterproductive as a negative attitude if it prevents the underwriter from discriminating between risks and negotiating terms as carefully as he/she should. Premium volume might well increase with such receptiveness to risk, but so might too for losses, and profits would suffer accordingly.
6. Why does an underwriter need to be able to adapt to change? (p. 6-7
Things change; nothing stays the same. An underwriter’s adaptability to change is therefore an aspect of the attitude that is so important to an underwriter’s success. Change is complicated by the fact that it does not occur everywhere at the same time. Change may also work to the underwriter’s advantage as often as it works to the underwriter’s disadvantage but whether a given change is a help or hindrance, the underwriter must adapt to it quickly.
7. Why must an underwriter be a self-starter? (p. 6)
A demanding job demands a highly motivated person to perform it. He/she must want to learn to improve as the underwriter must determine what needs to be done each day to improve or maintain his/her portfolio and satisfy the needs of clients and colleagues, and then do it. Underwriting rewards initiative.
8. How does an underwriter reach the best decision for a unique risk? (p. 8)
To reach the best decision for a unique risk, the underwriter must try to consider each risk without preconceptions. He/she should look for qualities that favour the risk as well as qualities that weight against it. And the underwriter should exercise his/her ingenuity to devise conditions under which the risk can be made acceptable and terms under which he/she may in good conscience agree to provide insurance.
9. Why should an underwriter remember to focus on customers? (p. 9)
In the grip of competing demands on his/her time, it can be easy for an underwriter to forget about customers and even to resent their requests as intrusions. The bias that is imposed on an underwriter by the need to produce premiums also makes it important that the underwriter bear the customer in mind in everything the underwriter does. Without customers, there is no need for underwriters.
10. Explain the significance of the phrase “you’re not a real underwriter until you’ve suffered your first million-dollar loss? (p. 11)
The point of the saying is certainly not that an underwriter should be indifferent to loss but rather the saying underscores the uncertainty that lies at the heart of an underwriter’s work. It acknowledges that no amount of information and analysis before accepting a risk can guarantee that the risk will not suffer a loss.
11. What is paralysis by analysis? (p. 11-12)
Paralysis by analysis may be understood as the tendency to let the desire for ever more information about a risk defeat the need to make a decision about the risk.
12. What is empathy? (p. 12)
Empathy is the ability and inclination to “put oneself in the shoes of another.”
13. Why is empathy important to an underwriter? (p. 13)
Empathy allows an underwriter to be more objective about the pressures and demands he/she faces by understanding the pressures and demands faced by the many people he/she must work with to achieve underwriting goals. In particular, a perspective based on empathy for others allows the underwriter to maintain highly motivated and to adapt to the constant changes that we have seen are both a cause of stress and basic fact of an underwriter’s life.
14. How is good will created? (p. 13-)
The key to creating good will is good communication. The importance of communication skills for an underwriter is rooted in the importance of the underwriter’s relationships with customers and with his/her fellow professionals. The underwriter must help create enough good will with the people he/she deals with that he/she can work with those people and others again and again.
15. What factors influence an underwriter’s communication style? (p. 14)
An underwriter’s communication style will be influenced by corporate philosophy, underwriting guidelines, and market conditions as well as his/her own personality.
16. What is the difference between the role of an underwriter in the insurance transaction and the role of a broker? (p. 15)
The underwriter’s job is to protect the insurer’s loss ratio and thereby help ensure the insurer’s profitability.
The broker’s job is to obtain insurance for the risks he represents.
17. What is the “old boys network”? How can such a network present a challenge to an underwriter? (p. 15)
One of the challenges for an underwriter in communication with a broker can be the “old boys network” that often exists between senior insurance professionals. Such networks exist informally and consist of overlapping personal relationship between members formed over many years of working with and for each other as their careers lead them to progressively more senior positions with a variety of companies.
A result of that network for the underwriter can be that the broker may know more about the insurer’s workings and direction than does the underwriter. The underwriter can best meet this challenge with experience.
18. How can an underwriter soften bad news? (p. 15)
The underwriter can soften bad news by advising the broker in courtesy of a written reply or a telephone call followed by confirmation in writing. The reply should explain the reasons for the bad news: why the risk cannot be written, why the premium must be increased, why the deductible has to go up. At all times, the news should be delivered completely and with tact.
19. What should an underwriter pay attention to when communicating over the phone? (p. 16)
The underwriter should on the telephone pay special attention to his/her tone of voice; otherwise, in the absence of non-verbal cues such as facial expression or body language, the underwriter risks communicating a different message than the one he/she intended.
20. What are some elements of good voicemail etiquette? (p. 17)
Good voicemail etiquette to minimize problems would include the following:
· Answering the telephone if possible
· Recording a new greeting daily
· Using a businesslike and professional tone, whether recording a greeting or leaving a message for someone else
· When leaving messages for others, stating one’s own telephone number at least twice in the message
· Returning messages promptly and not letting them accumulate
21. What are some challenges of communicating via e-mail? (p. 17-18)
· The e-mail user needs some way to rank messages in order of priority.
· E-mails messages are inappropriate in situations where the more personal touch of a telephone call or the greater formality of a letter is needed instead.
· E-mail is not truly private.
22. What makes the regions in Canada
Regions in Canada
23. What should an underwriter’s main concern in communicating with someone whose first language is different from his/her own? (p. 19)
The underwriter should be more concerned to understand then to be understood. That is, the underwriter’s primary communication skill in conversation is to listen well and be patient. Where the underwriter finds what another person has said to be unclear, it is good practice to repeat what has been said to confirm understanding or be corrected as necessary.
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