Where have all the good underwriters gone?

For years, insurers have poached commercial underwriters from one another amid M&A activity, an aging population and hard/soft markets. But that’s left the industry with less seasoned talent and slower investment in acquisition, training and retention.

“Suddenly, more so than ever before, it seems as though a large number of good underwriters are gone,” said Rorie McIntosh, CEO of Oshawa-based McCAM Insurance.

At least that’s how it felt for brokers scrambling with hard-to-place risk, he added.

“In a hard market, whether there are seasoned underwriters or not, they’re often stripped of their underwriting authority. It’s a stressful environment to be in,” explained David Edgar, chief broking officer of British Columbia-based CapriCMW.

“I think the pandemic has prompted many experienced underwriters close to retirement age to retire prematurely,” he added. “The problem is, the new generation coming in to fill that void aren’t staying in their roles long enough to get really good at it, or they get poached for better opportunities as soon as they’ve been trained.”

Since March 2020, insurance companies have accelerated investments in automation and digitization, leading to brokers seeing more cookie-cutter underwriting.

“The impact of all this,” said Edgar, “is brokers experiencing a real loss of underwriting expertise, knowledge and resources, which makes placing business harder than ever.”

Loss of talented people also means service levels have dropped, said Bill Dalton, senior vice president of commercial at Atlantic Canada-based Cal LeGrow Insurance & Financial.

“Since there aren’t enough seasoned staff joining, inexperienced talent is being hired, not trained fast enough and often overworked. And there’s a learning curve, so the existing relationships with brokers tend to suffer in the process,” Dalton said. “We’re relying a lot more on the insurers we’ve [already] built good relationships with to see us through these unprecedented times.”

Lately, these brokers report placing a lot more business with MGAs – where some of the seasoned underwriters have gone.

“It’s not necessarily about finding better service, but better access to marketplace and the MGAs’ ability to place hard-to-place risk, which insurers simply couldn’t place over the last couple years,” Dalton said.

While the situation seems dire, it’s not here to stay, predicted Paul Christie, vice president of commercial sales at Hamilton-based Lawrie Insurance Group.

“I do believe it’s somewhat of a blip,” he said. “The industry is slowly bouncing back and adapting to the new normal: enabling more work-from-home opportunities, focusing on work-life balance and digitally interacting with employees and clients. This all bodes very well for the industry’s talent acquisition and retention strategies.”

Almost all of Lawrie’s service support staff effectively work remotely. “We’ve seen great growth on our portfolio in the past two years, so we believe it’s a sign of success,” Christie added.

But, he warned, as the industry waits for the market to soften, the biggest challenge is avoiding the ripple effect of productivity issues on the broker side.

“If our submissions to the underwriters aren’t complete, they have to come back with questions, which delays things, eats up the underwriters’ time, often the submission goes to the bottom of pile, and ultimately the turnaround time is affected and there’s no new business being written,” Christie explained.

“We’ve decided to implement new quality control parameters for all underwriting submissions,” he added, advising other brokers to revisit their submissions-control measures to facilitate faster turnaround.

Christie also advised brokers to be strategic about their placements.

“Know the carrier’s appetite, which is constantly evolving, and be strategic about submitting business where you know it won’t get placed,” he said. “Rather than firing off a submission to 20 insurers at once, we’ve learned it serves everybody better when we’re strategic about who we work with.”

 

This article is excerpted from one that appeared in the April issue of Canadian Underwriter.

Feature photo courtesy of iStock.com/lemono