Power hour: Access to underwriters

How difficult is it to recruit and retain underwriting specialists outside of London?

▶ Paul B: Our head office is in Gloucester but it is not one of the major conurbations [so] it is difficult to get the right talent. We do put quite a lot of effort into growing our own and we have had success with that. But, increasingly, we are having to be flexible about how we get the talent in, how we work with them and where they work from.

▶ David: As insurers have reduced their local presence and reduced the number of offices, they’ve lost an awful lot of good people. There’s been a loss of focus on training your own and developing staff. People are beginning to see the consequences of that. [But] we are waking up and doing something now. There is going to be an issue for a period because you can’t just flick a switch and suddenly you’ve got a stream of ready underwriters to move into your offices. It will take three to five years to be able to fill that gap.

▶ Dawn: Over the last 10-15 years, there’s been a lot more effort around multi-skilling. Fifteen years ago you had a lot more specialisms – people tended to go in as a property underwriter and remain as one. But the attention really went to being more multi-disciplined so the expertise has been spread more thinly.

▶ Paul U: You have to trade off lifestyle issues. We’re down in Maidstone and we’re not going to pull someone out of Allianz’s corporate insurance underwriting [division] when they’re on £100,000 a year and make them move to Maidstone for £45,000. You’ve got to try and deal with a set of people that have the characters you need in terms of strength and technical knowledge but who want a slightly different set of lifestyle criteria.

▶ Caroline: It’s very much about lifestyle and it’s about what an individual may want.

▶ Steve: It is quite ironic, a lot of offices were closed like in Newcastle and Cardiff but a lot of insurers are now going back there. [It’s] the push towards having regional representation, most of our best people are in our regional offices because we want more regional offices than we have offices in London.

▶ Stewart: Insurance companies are becoming better skilled at retaining [talent], they know who their key people are and they make it very, very difficult for those people to move elsewhere with remuneration, succession planning and a career plan. It’s very difficult for a new insurer to go into a region and actually get a team of people very quickly and easily in terms of setting up a new structure.

▶ Lisa: From a middle market corporate perspective the calibre of underwriters in the region is second to none, they’re up there with any London underwriter. London does have its specialisms, the energy, construction and international market… I would certainly say the calibre within the regions is very high quality.

▶ Simon: It’s also the local knowledge. Even if two underwriters were of equal ability an underwriter that knows the local market, knows the area and businesses, that’s worth so much money at the bottom line. My previous role was working for a large insurer and we always found that the smaller branches, the Exeters, the Gloucesters, had a loss ratio about 10 points less than the bigger offices just because there’s good business there and they know the market.

▶ Graham: It’s also about relationships as well. We have offices in Harrogate and Glasgow and they don’t really have to use London because they’ve got good relationships with the local market. They’ve got good underwriters and they feel that the quality is there. When I said to them do you think there’s a difference between what we have in London and what we have in the regions they said ‘no, not really’.

Have brokers noticed a shift in emphasis from the big insurers towards devolving underwriting power to the regions?

▶ Paul T: The big frustration is you have a market where the insurers have a regional presence and then they decide to centralise. Suddenly they have lost a lot of business so they open the regional offices again and have to do the whole recruiting again. We need consistency. If you’ve got a regional office then keep the regional office, let us build the relationships.

▶ Paul U: I don’t think brokers are too worried as long as they get a decision. When a broker latches onto you because you can provide them with something they can’t get elsewhere in terms of speed and response, you write business for them. That is the main thing people want, they don’t necessarily want bells, whistles and big commissions – they just want to do their job efficiently and quickly.

▶ Steve: In the past, authority was given out to the branches but the same level of accountability wasn’t. You had people writing business in regional offices that didn’t have a lot of accountability for the results of what they were doing. Now the insurers have got a lot better about giving some accountability.

▶ Stewart: It’s all about relationships, if you meet an underwriter as a broker and you build a relationship, a rapport, you are more likely to do business together. So when you have that last minute opportunity who do you ring? You ring that guy you have a relationship with.

▶ Dawn: We have introduced development underwriters. We are a smaller insurer - we can’t have branches across the whole country so we’ve actually placed development underwriters in certain territories around the country who can build those relationships, do the on-site underwriting, promote products, so they’re not only underwriting, there’s a sales angle as well.

Are underwriters more empowered and have broker relationships with them improved over the past 12 months?

▶ Graham: I wouldn’t say it’s changed over the last 12 months. I think the relationship with underwriters has to be good. If you’re a good broker you have good relationships, it’s that simple. You want quick decisions and that’s critical and, generally speaking, over the last few years we’ve noticed that improve dramatically.

▶ Caroline: [With] empowerment comes confidence and then with confidence you can build relationships. Everyone is going to remember the person they can call at 5pm on a Friday who is going to be able to make the decision.

▶ Paul T: Relationships are built over a period of time. Now we’ve got more consistency in the office, there’s a lot less staff moving around so we’ve been able to build up long-term relationships.

Is technology creating ‘virtual underwriting’ teams and what impact could this have?

▶ Steve: It’s the calm before the storm. If you look at what happened to the personal lines market 20 to 25 years ago and look at it now it’s completely technology driven and segmented. It’s very much automated and has changed the whole market. That’s the six million dollar question, how far can it get when you’ve got some fairly big and complicated risks? How far up the spectrum can automation go?

▶ Lisa: Technology is an enabler but you do need to set it at the right level. Technology is not going to replace underwriting and nor should it. But it does allow speed and efficiency, it allows us to react to customers’ needs and build products far more quickly, and for [our] underwriters to be back out listening to brokers.

▶ Simon: When you talk about technology, the inference is that the machine is making the decision and that does not have to be the case. You can have a situation where a very, very complex business is electronically traded, but the only element of the electronic trading is actually the transfer of data. The decision is all human and actually the underwriter gets to spend more time underwriting and less time keying than otherwise would be the case.

▶ Graham: The technology is going to be there but it’s got to be more about how we trade, not how we underwrite. If we keep the focus on that, then it will work. What we don’t want is to allow technology to take over underwriting at a sizeable level.

▶ David: I do have a bit of a concern because I remember growing up in insurance. You cut your teeth on those really small, simple cases so we are going to have to be quite creative in our training to find different ways to develop people because we won’t have that volume of really simple stuff there.