Risk Insider: Warren Berey

Qualitative Underwriting

By: | September 18, 2017

Warren Berey is SVP of Multinational Insurance at Generali Global Corporate & Commercial U.S.A., overseeing the development of international casualty and package insurance solutions for U.S. companies and U.S. subsidiaries of foreign companies. He can be reached at [email protected]

As globalization continues to develop, insurance needs continue to evolve. Risk managers, brokers and underwriters understand the importance of good risk management and protecting foreign investments, but identifying the right insurance solutions to match a company’s changing needs and reducing volatility is becoming more of a complex undertaking.

Controlled master programs for multinational companies have become quite common, but what is offered by each program can vary significantly. Ultimately, it comes down to optimizing the program to have the right blend of price, coverage and responsive service. Many companies are trying to optimize their portfolios using predictive analytics — i.e. using “Big Data” to determine risk.

Without question, this certainly has its place in the process and to the extent that we can tap into modern technologies and data to help free up human capital from rote processes, we should. That said, it’s important that we utilize technology and predictive analytics modelling to allow our people to focus on the more difficult problem-solving equations of underwriting – not replace them. What we must remember is that while there is undoubtedly a scientific aspect to understanding risk, there is also an art to it.

While data and analytics have their myriad benefits, they also tend to anesthetize the relationship between risk managers and underwriters.

While underwriters will thoroughly analyze all available data, they are often looking for additional color as well. To provide the right insurance solutions, underwriters need to be able to understand the complexities that are present for today’s multinational companies. It isn’t enough to simply plug in the numbers — a personal connection and detailed knowledge is paramount.

Understanding a company’s operations, philosophy, products, and leadership beyond can provide insights that go far beyond a predictive model when evaluating risk. For underwriters, thoroughly understanding a company makes for a stronger connection.

The multinational insurance industry has become increasingly volatile from a personnel standpoint and in a digital age, where change can occur in a mere 140 characters, turning quality risks upside down in milliseconds, that volatility can quickly become disastrous. That’s where experience comes in, having underwriters that can rely on years of institutional knowledge when assessing risks allows them to layer that experience on top of the data that modern algorithms provide.

While data and analytics have their myriad benefits, they also tend to anesthetize the relationship between risk managers and underwriters. The benefit of fewer surprises, more nuanced coverages, and high-touch customer service can go a long way in fostering lasting relationships between underwriters and insureds, an increasingly disappearing art in today’s on-demand marketplace.

As insurers, one of the best things we can do as an industry is to invest in our people and push underwriters to develop longer-term relationships with clients. Having talent that can earn the respect and trust of brokers and risk managers at multinationals produces greater transparency over the course of the relationship, allowing insurers to write better policies and provide the client with better service.

So while it’s important to focus on the science of quantitative data, insurers must not lose sight of the importance of the qualitative arts as well.

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The R&I Editorial Team can be reached at [email protected]