Brokers v. Underwriters

Just how much sibling rivalry exists between underwriters and brokers? Sure, they work together to find the right solution for clients (one would hope they do, anyway), but if you ask underwriters or brokers on each side of the proverbial fence, each side would tell you they have the best job in the world.

But when you compare the two vocations to each other, as everyone is wont to do at industry events and water coolers across the country, which is the best relative to the other? Who really has “the best job?”

ROUND 1: THE STATS

Research tells us that when it comes to recruiting, underwriters have a leg up over brokers. The Insurance Institute of Canada published A Demographic Analysis of the Property and Casualty Insurance Industry in Canada 2000-2017 in 2008.The report, produced by R.A.L. Consulting, was the first of a two-part series that examined the demographic data of 43 insurance and reinsurance companies, adjusting firms and brokerages in the Canadian property and casualty sector.

According to the study, brokers reported a much harder time recruiting. About 63% of brokers reported finding it “very difficult” to recruit, whereas only 26.7% of underwriters surveyed reported the same degree of difficulty in recruiting.

Nearly 40% of brokers and 66.7% of underwriters said recruitment was “somewhat difficult.”

No brokers reported that recruitment was a snap. In contrast, 6.7% of underwriters said they didn’t have any problems recruiting.

“Two factors stood out among the respondents’ perceptions of what made recruitment difficult — too few qualified candidates and uncompetitive compensation levels,” wrote the study’s author, Richard Loreto, president of R.A.L.

But just because brokers appear have a trickier time drawing new blood into the their line of work than underwriters, that’s not to say that they have a tough time keeping the people they do recruit. When it comes to retention, the gap between the two sectors was not nearly as wide.

Nearly 60% of brokers and just over 50% of underwriters said that retention was “not at all difficult.”

The only factors that made retention difficult, according to a majority of respondents, included uncompetitive compensation levels and limited career prospects.

ROUND 2: MONEY TALKS

So it would seem money is a driving factor in drawing people into the business and keeping them there. But oddly enough, according to PayScale Canada, a salary benchmarking service, the median salaries for insurance underwriters and insurance brokers with less than a year of experience are neck-in-neck.

A newbie broker, according to the site, can expect to earn between $25,500 and $33,900 in his or her first year. Underwriters reported earning between $28,300 and $33,032 during the same period.

Look a little further down the career line, though, and it appears that once an underwriter hits the four-year mark in his or her career, the pay scale tops out around $49,000. There isn’t much movement from there until around the 20-year mark, at which point the range increases to a summit of $60,000.

In the brokers’ corner, while they can expect to earn roughly the same as their underwriter counterparts at the end of their careers, they seem to enjoy a steady increase in salary over the course of their respective careers.

ROUND 3: EMOTIONAL FACTORS

Jason Famme, vice president of W.B. White Insurance in Oshawa, Ontario, started out in insurance as an underwriting trainee at a major insurer. It wasn’t long before he left the big corporation for a smaller, family-owned brokerage.

“I believe if I had stayed as an underwriter I probably would have climbed up a bit in the company,” Famme says. “There are lots of opportunities on the corporate side, but you’re going to be capped. As you go up the rungs, there are fewer spots, but the same number of applications. So, I think the odds of being able to control your destiny on the broker side are a little bit more.”

Judy Bell, office manager at Beyond Insurance, in Whitby, Ont., also started out on the underwriting side of the fence before shifting to the brokerage business.

For Bell, working as a broker allows her a freedom that she doesn’t feel underwriters enjoy.

“We represent many different companies. An underwriter can only work within the scope of their company’s rules and regulations, whereas a broker has more options,” she says, “So, I find that I can offer solutions rather than having to say, ‘No.’ There’s more of an opportunity as a broker to fulfill need than for an underwriter.”

Linda Regner Dykeman, senior vice president of commercial lines solutions and strategies at Aviva Canada, agrees that underwriting in personal lines can be quite structured, but underwriting commercial policies is a whole other ball game.

“Commercial lines is a lot broader and not as regulated [as personal lines],” she says. “It allows for a lot more creativity and analysis versus following rules and following a book.” Regner Dykeman takes a lot of pleasure in researching each of the industries for which she underwrites. She says she loves learning every little detail about them so that she can get a firm understanding of the risk and develop a coverage that’s tailored to the business.

RSA’s Ann Lomax, leader of property underwriting, agrees with Regner Dykeman.

When describing why she feels her job is the best, she says: “Nothing is ever static. Who would have thought 25 years ago we would need to put an exclusion into policies regarding marijuana grow operations, for example?”

She compares her job to being a detective. “It’s all about assessing the facts. Are they correct? Do they make sense? Have I answered all of the right questions? And then coming up with an appropriate conclusion, which in our case is the premium.”

Underwriting tends to be much more analytical, sources say. Brokering, on the other hand, is more about negotiating and working with the consumer to shop around for the right coverages. But at the end of the day, it’s clear both sides of the fence feel that their ultimate responsibility is to help the insured — even if it means working together.

“Without insurance, very few people would take a risk,” Regner Dykeman says. “We look at it as a partnership with the broker.

“Brokers are responsible for ensuring that the client has the right coverage and then working with a number of underwriters to find the right solution. Whereas from an underwriters’ perspective you have the one customer you’re looking at. You’re understanding that customer and helping the broker to select the right coverage.”

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Brokers are responsible for ensuring that the client has the right coverage and then working with a number of underwriters to find the right solution. From an underwriter’s perspective, there is only the one customer that you are looking at. You’re understanding that customer and helping the broker to select the right coverage.