How Can Insuretech Support Underwriting Discipline?

Back in the eighties when I first entered the Lloyd’s insurance market, underwriting discipline simply meant doing exactly what the underwriter told you to do and not deviating from the rate sheet tucked conveniently at the top of the ‘box’ drawer. The focus back then was primarily on writing for premium, hitting capacity limits, and meeting the business plan income targets, arguably with less thoroughness in assessing the true quality of what was coming across the desk. That was thirty years ago, and the market was a very different place back then. In the soft market we’ve been operating in in recent years, the pressure has been firmly on Chief Underwriting Officers (CUOs) to ensure underwriters write business under the strictest control and conditions. That is, however easier said than done and it’s difficult to avoid the shareholders’ cries for growth and market share and investors’ demands to hit quarterly targets. Underwriting discipline should be nothing more than properly evaluating a risk and making rational, reasonable decisions on acceptability, pricing and coverage and that may mean turning business away. Strong profitable companies realize that this may result in slower growth or even portfolio shrinkage but that that discipline ensures profitability…easily said.