Monthly Archives: March 2015

Underwriter? What’s that?


I have a soft spot for the underwriting profession, primarily because that’s where my own career got started.  It has to be one of the least understood professions out there.  My own story is typical.  My senior year at Michigan State University (Go Spartans!) was filled with on-campus interviews with a variety of companies and job types.  With an undergraduate degree in Socioeconomics (a blend of political science and economics), I wasn’t sure what sort of job awaited me.  What I had going for me was a strong set of analytical and communication skills.  As it turns out, that skill-set is well suited to insurance underwriting.  But I didn’t know that then.  When I interviewed with CIGNA (back when they were still in the property and casualty insurance business) I had to do some fast research to have the slightest clue about the job for which I was interviewing.

So what does an insurance underwriter do?  At the very heart of the job, it comes down to deciding which risks the insurance company will accept and at what price/terms.  Staff underwriters typically work in an insurance company home office and set guidelines for the types of risks that are acceptable to the company.  Line underwriters apply those guidelines to the individual risk applications that they underwrite.  That is an oversimplification of the job because underwriting requires thorough analysis of risks, interaction with insurance agents, loss control, claims, management, and more.  Creativity and problem-solving skills are paramount because some risks may not be acceptable upon first review but creative application of loss control measures and insurance contract modifications can make it possible to accept a challenging risk.  A win-win-win for the insurer, the agent, and the insured.

Rather than reinvent the wheel, take a look at this description of effective underwriting.  I remember my early days as a brand new property and casualty insurance underwriter, and the relationships that I built with many commercial insurance agents.  They knew that I was a “newbie” and I appreciated their patience with me, and many of them took the time to contribute to my early career education.  An experienced underwriter is like gold to an agent because they have the stories and insights that help agents to write more business that fit within the underwriting appetite of the insurer.  I moved on to an underwriting/marketing staff position, and then jumped over to a corporate risk management position before launching my own business.  I didn’t spend enough time in my underwriting job to develop the kind of deep expertise that makes an underwriter extremely valuable.  I respect the underwriting professionals who have developed that kind of expertise and make the industry work so well for the insurers, agents, and insureds.  It’s a little-understood job, but a very rewarding and valued job.  Go kiss an underwriter today.


“Hottest” Hiring Market in Years


No doubt about it… the insurance industry is in need of young talent.  I’ve written about this fact several times in the past year, and the evidence continues to point to continued strengthening in the demand for labor in and around the insurance industry.  The latest evidence is provided by a study that you can read about here.  If ever there was a time to consider a career in risk management and insurance, it is now.

Speaking of opportunities, here is one for those with at least some experience in the industry and an interest in an exciting “ground-floor” opportunity:

An independent insurance agency based in Southfield, Michigan is seeking a licensed insurance producer with at least three years of experience to join its firm and help to drive its growth plan. For the right professional with strong motivation and drive, this opportunity could involve some ownership interest in the agency. Individuals interested in exploring this opportunity should contact Souzan Haddad at 248-352-3222.

I am aware of several career and internship opportunities in the insurance industry right now, so the aforementioned opportunity is but one example.  Get ’em while they’re hot!

Oh, and one more thing… the vernal equinox occurs at 6:45pm EDT today (March 20) so this is the perfect time to wish you a happy spring-time!

Pi Day


Every March 14 is Pi Day (3.14) – but this year is the once in a century extended version of Pi Day…  3.141592653 (3/14/15 9:26:53am)

In honor of this whimsical encounter with a once-in-a-lifetime intersection of the calendar/clock with this irrational number, I offer this insurance industry perspective on “irrationality.”  Conveniently posted at precisely the momentous day and time (by my watch), of course.

Happy Pi Day!

Driverless Cars and Corporate Filings


The Wall Street Journal reported last week that the reality of driverless cars on the public roadways is now being recognized as a business risk in some corporate filings.  According to the WSJ piece, three insurers and an auto parts firm have listed driverless cars as a risk factor for their future business.  Granted, the “risk factors” section of corporate filings is a laundry list of cover-your-backside investor disclosures so that if/when a publicly traded company’s stock price tanks the firm’s management and directors can point to the filing and say, “See, we told you this might happen, so don’t blame us.”

It’s interesting to me that the insurers are flagging driverless cars as a potential business risk due to the possibility that such cars might actually reduce the number and severity of accidents, and reduce the demand for insurance products.  Uh, what?  As long as there are fast-moving hunks of metal and mass chugging down roadways, there will be a need for insurance.  But what if driverless cars actually reduce the number of accidents, injuries, and property damage?  Isn’t that what the insurance industry has been wanting to do all along?

I wrote about driverless cars a few months ago, and raised several questions that remain unanswered.  I’m sure that these and many other areas of uncertainty underlie the insurers desire to include driverless cars as a potential business risk.  We always fear the unknown.  Peter Drucker, in Managing in the Next Society, wrote:

“If you start out by looking at change as threat, you will never innovate.  Don’t dismiss something because this is not what you had planned.  The unexpected is often the best source of innovation.”

I don’t necessarily think that all insurers are viewing driverless cars as a threat, just because they list it as a potential business risk in their mandatory corporate filings.  More likely, it’s an acknowledgement that there will be some volatility brought about by such a major innovation.  As the WSJ article points out and my previous blog entry alluded to, when driverless cars are involved in accidents the insurance burden may shift from the personal auto insurance policy to the manufacturer’s commercial general liability policy because the “at fault” aspect of the accident may have more to do with the software than the person sitting inside the car.  Still, not knowing how all of this will shake out and affect the insurance premiums and claim payouts most certainly is beginning to enter the stream of consciousness in the insurer board rooms and management suites.


Google Compare


Google Compare has debuted in the California auto insurance market.  Google Compare is to auto insurance what is for flights, hotels, and rental cars.  It’s a comparison shopping service that gathers driver, automobile, and coverage information and then displays up to 14 premium quotes for auto insurance.  I suppose it was inevitable when everything else seems to be gravitating towards online commoditization in the 21st century.

To be sure, the California-only service is off to a humble beginning with only 14 insurers currently participating, and none that are household names.  It is also true that Insurance comparison shopping is not a new idea, as evidenced by and  Still, something feels different about the Google Compare service.  For one thing, it’s Google – the renowned curator of all the world’s information, and the company who has professed to “not be evil” since its formative years.

I can’t help but wonder what Google’s entry into the personal lines insurance market means for the industry.  Further disintermediation?  Probably.  Reportedly, Google plans to offer this service nationwide by next year and extend the site to include homeowners insurance.  For the time being, the major brand-name insurers such as State Farm, Progressive, and Allstate have no stated plans to participate in Google Compare.  I wonder if they’ll be able to resist the Google juggernaut if Google Compare becomes a hit. Southwest Airlines doesn’t permit its airfares to appear in comparisons, and they seem to be doing just fine.  But all the other major air carriers are on

And then there is this – price comparison sites reinforce the notion that service doesn’t matter, coverage differences don’t matter, and agents don’t matter.  Could the entry of the 800-pound gorilla (i.e., Google) into the insurance market have the same effect on insurance agents that the online travel sites have had on travel agents?  And Mr. Page, is that good, or is that evil?