Underwriters see their landscape changing in a need for more control

Underwriters are not accustomed to taking instructions and are certainly not keen to share their hard-won information. Yet underwriters can expect more of their decision making to be scrutinised by actuaries and senior managers in the years ahead.

“Companies recognise that underwriters need support and control frameworks,” says Stewart Mitchell of Ernst and Young’s European Actuarial Services.

While there remains a strong perception that the underwriter is “boss”, more firms are challenging the underwriters in what they are writing.

“Audit committees and boards are increasingly interested in this now. Successful companies will be the ones where actuaries can challenge assumptions. As a result, people will feel they can manage the cycle better than they did last time,” Mitchell added.

A poll by Ernst and Young among 15 major insurers and reinsurers found that most had begun to create more monitoring systems around underwriting. Even so, some companies are still lagging behind.

“Companies are crazy where they have underwriters doing technical pricing but also employ actuaries who are not involved in the process,” Mitchell said.

Actuaries not only need to be in a position to provide information for the underwriters – and for them to understand it – the actuaries also need to be able to ‘push back’ if they need to.

However, Mike Barkham, a partner at Ernst and Young, admitted that actuaries are “not always the best communicators”.

“There is better awareness of monitoring rates than there was before, especially with the Lloyd’s minimum standards being applied, and there is much more knowledge now about monitoring the rates and technical pricing,” Barkham said.

“Our research confirms that technical pricing and rate monitoring are critical to surviving a soft market.”