Author: Roger Lewis, FUSE Consultancy Date: 13th July 2021
Introduction
In insurance circles where things change slowly, when a new skill set arrives on the block, it is worthy of investigation. So, who are ‘Portfolio Underwriting Managers’? What do they do? Why is this new role becoming increasingly popular at insurance companies? And what is it they crave for? FUSE interviewed three of them to find out.
What is portfolio underwriting?
Rather than underwriting one single class or specific type of insurance, the portfolio underwriter looks at groups or portfolios of business. One objective is to spot small changes that could be made across, perhaps in risk selection or terms, which, when applied across the portfolio, will make a significant improvement in performance of the portfolio.
But is it all about profitability?
“No. Performance is not just about the loss ratio” according to Richard Marshall, Portfolio Manager at HDI Global SE. “Performance also relates to sustainability, growth opportunities and importantly, portfolio balance. Balance is a measure of risk and reward, mitigating risk and optimising reward. Balance can be evaluated and monitored by variables such as location, relative volatility, short/long tail mix, distribution source and volume.”
According to Jasvir Grewal, Portfolio Manager at Markel International, “the aim is to provide food for thought by extracting new insights from utilising both internal and external data sources. Part of the joy is mining the data and “connecting the dots”. This presents a more complete picture to use as a benchmark base upon which to act.”
Why has the role become so popular at insurance companies?
It’s all about the data. One major challenge is combining all of the various data sources, including data provided by the insurer’s Delegated Authority underwriting agents or MGA’s. Add in the fact that many insurance companies operate in separate divisions, or geographies, with separate systems or data pools and one can appreciate the challenge, but also the opportunity. Imagine if an underwriting lesson learned in one part of the portfolio could be quickly validated across a bigger data set, then shared with other underwriters both in the company and across the insurer’s delegated underwriting MGA network.
What sort of skills does a portfolio underwriter need?
Given the analytical work required it is no surprise that many portfolio underwriters seem to come from an actuarial background. But it is almost more important to have a strong understanding of the insurance classes the company underwrites, and the key people in the business and wider delegated authority network that the portfolio underwriter must work with. There is little point in coming up with valuable changes to underwriting appetite, or risk mix vs. target risk mix, if your audience is not listening. Insurance is very much a people business.
According to Nadine Kearney, Portfolio Manager at Covéa “strong stakeholder management skills are needed to both access the data from multiple sources, and then articulate the lessons learned.”
And what do portfolio underwriters crave for?
Given a magic wand, there are three things which portfolio underwriters would ask for:
- Realtime data, meaning the interventions which the portfolio underwriter recommends, can be immediately put to good use and the results immediately apparent.
- Consistent data capture, all across a portfolio of insurance underwriters.
- Technology that would allow the single portfolio view across multiple data sets to be accessed, analysed, manipulated and displayed.
Sounds like a very sensible wish list to me. Let’s see what happens.
Author: Roger Lewis, FUSE Consultancy Date: 13th July 2021