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

Continuation of Part 1 of the article by Chris Sheppard:

Underwriters actually look at your websites. In fact, good underwriters go over it with a fine toothed comb. What might be prideful boasting to you (above example), is a red flag to the underwriter. Do you think your underwriter is going to be aggressive, or even quote an account that does work in the aerospace industry? Not in a million years! I know it’s tempting to overstate your capabilities, but realize your prospects aren’t the only one’s looking at your website. Only highlight what you actually do, nothing more, and nothing less. Don’t give the underwriter reasons to ask even more questions, especially it they are unwarranted.

I would be remiss if I didn’t mention the relationship between the underwriter and the loss control representative. Loss control is the eyes and ears of the underwriter. Very rarely does an underwriter get to visit with an insured either during the quoting process, or after they’ve become a customer. They rely on the findings of the loss control department. If you want to impress the underwriter, you must first impress loss control!

You should do everything you can to make sure the loss control visit goes smoothly. The loss control rep’s job is to do a physical inspection and report back to the underwriter with his/her findings. Do you have bad housekeeping? Are the proper safeguards in place? What is your attitude towards safety and the minimization of losses? Are you receptive to their suggestions? Are you confrontational? Believe me, all of these things get back to the underwriter and are reflected in the pricing.

One of the worst things an insured can do is quote his insurance every year. I know the temptation is to save money. If your broker is doing his job, and not taking you for granted, he will work with the existing carrier on a competitive insurance program. If you quote your insurance every year, you are doing yourself a disservice. Insurance carriers like to quote business they think they have a legitimate shot at writing. Say in 2004 you quote your insurance with a few carriers. In 2005 you do the same thing again. In 2006 you decide to go out to bid again. Believe me; the carriers who quoted, and didn’t get your account in the two previous years, more than likely won’t be quoting in that third year. They will do one of two things: either not quote, or they’ll just throw out a number without dedicating any time or energy to your account.

I think everyone can relate to how an underwriter thinks when it comes to a company that quotes every year. I’m sure most of you have “suspects” of your own that always want you to give them a price, with no intention of ever giving you the business. They simply want to keep their current supplier “honest.” Do you yourself put much time and effort into these accounts? The answer is probably no, so why should an insurance company be any different? By quoting your insurance every year you get a bad reputation, and no reputable broker will be willing to work with you. I know it’s tempting, but don’t do it! Of course if your relationship with your current broker has soured, then by all means you should look elsewhere. Insurance companies look at the relationship as a partnership and like companies that are willing to work with them. I’m not saying don’t look at your insurance, just don’t do it every year.

My last point is the underwriter’s time. Underwriters need time to effectively underwrite an account. Ideally, they like 2-3 months lead time. Reason being, if you wait until the last minute, and your insurance comes up during a busy time of the year, they might not have the resources available to provide you with a competitive quote.

Most underwriters are good at what they do, and they should be respected. Typically, insureds don’t know what makes an underwriter tick, and hopefully this article has enlightened you as to how they operate behind that “curtain.”

Chris Sheppard, CPCU, AFSB is VP of Sales for Smith Buckley & Hunt Insurance Agency in Brockton, MA. To learn more please visit http://www.sbhins.com

You may also contact Chris directly at chris@sbhins.com