Inside the Mind of an Underwriter – Demystifying the Underwriting Process – I

by Chris Sheppard

Have you ever wondered who that person is behind the curtain? Contrary to what you may think, it’s not the Wizard, but the insurance company underwriter. Believe it or not, there is a real, live person on the other end of your insurance contract. The underwriter is the central figure in determining what you will pay for your insurance. Wouldn’t it be nice to know what makes an underwriter happy? Conversely, wouldn’t it be nice to know what upsets an underwriter?

There is a direct correlation between the quality of the information given to your underwriter, and the price you pay for insurance. Like the old adage, the less you put in, the less you get. The more you put in, the more you get. I know what a lot of you are thinking; “I’m not the one filling out the application, the broker is.” This is of course true; but if you give the broker poor information, the underwriter will get that same poor information.

As brokers, we complete applications with an endless supply of “underwriting questions.” If you’ve ever quoted your insurance, you know exactly what I’m talking about. What seems mundane to you is very important to the underwriter. I’m sure you’ve asked yourself (and your broker), “why do they want to know that?” Trust me; there are valid reasons for the underwriter’s questions. Bottom line, the better the information given, the better the quote.

Are there multiple named insureds? Wouldn’t it be wise to list all of the named insureds, and give a description of what they do? If you know you are going out to bid, make sure you have at least four years of currently valued loss runs before you ask someone to quote. There is nothing worse than sending up a submission without losses, and then finding out three weeks later that your losses are a lot worse than we were led to believe. You know the agent is going to ask for a complete drivers list; why not have it ready? Are you assigning markets so competing agents don’t go to the same companies? You should.

Have you ever taken a good hard look at your website? Is it completely accurate? Are there maybe some things on the website that aren’t completely true? Business owners are proud of their company and their capabilities. Sometimes they have a tendency to boast about things they don’t (or haven’t) done. For example, a manufacturer might say he is capable of producing products for the aerospace industry, when, in fact, they never have. Are they capable? Sure they are, but they never have.

Click here for part 2 of the article.