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    Closing the Gap: A Model for Commercial Underwriting
    Closing the Gap: A Model for Commercial Underwriting
    Closing the Gap: A Model for Commercial Underwriting
    Ebook223 pages1 hour

    Closing the Gap: A Model for Commercial Underwriting

    By Frank S.D. Alexander

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    About this ebook

    This book explains how analyzing gaps during the underwriting process can lead to better coverage, higher profitability, and better managed accounts. Topics include:•Necessary technical skills•Necessary soft skills •Mechanics of gap analysis •Role of the underwriter•Role of the broker
    LanguageEnglish
    PublisherThe National Underwriter Company
    Release dateFeb 8, 2013
    ISBN9781938130489
    Closing the Gap: A Model for Commercial Underwriting

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      Book preview

      Closing the Gap - Frank S.D. Alexander

      This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.— from a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations.

      Copyright © 2007 by

      THE NATIONAL UNDERWRITER COMPANY

      P.O. Box 14367

      Cincinnati, Ohio 45250-0367

      All rights reserved.

      No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the publisher.

      International Standard Book Number: 978-1-938130-48-9

      Library of Congress Control Number: 2007934405

      Printed in the United States of America

      Table of Contents

      About the Author

      Introduction

      Chapter 1: Underwriting

      The Underwriter as Investor

      The Insurance Market

      Underwriting Discipline and Underwriting Consistency

      Underwriting and The Customer

      Summary

      Chapter 2: Core Underwriting Competencies Technical Skills Knowledge and Abilities

      Ability to Select Profitable Commercial Risks

      Knowledge and Understanding of Your Company’s Guidelines and Authority Levels

      Knowledge and Understanding of Claims Analysis Techniques

      Pricing Skills

      Account Development and Management Skills

      Business Planning and Management Skills

      Broker/Agent Development and Management Skills

      Portfolio Management Skills

      Summary

      Chapter 3: Core Underwriting Competencies Non-Technical Skills Knowledge and Abilities

      Decision-Making Skills

      Negotiation Skills

      Selling Skills

      Coaching, Mentoring, and Training Skills

      Communication and Presentation Skills

      Customer Service Skills

      Conflict Resolution Skills

      Time Management and Organizational Skills

      Computer Literacy Skills

      Summary

      Chapter 4: The Commercial Lines Plan

      How the Plan Governs the Underwriting Process

      Chapter 5: Leadership

      Strategic Plan

      Customer and Market Focus

      Process Management

      Human Resource Focus

      Access to Information and Analysis

      Communication

      Profitable Business Results

      Summary

      Chapter 6: The Broker as Primary Underwriter

      There is Only One Customer

      Visit the Customer

      Risking Shareholder Capital

      Roles and Responsibilities – Strategic

      Roles and Responsibilities – Customer & Market Focus

      Roles and Responsibilities – Process Management

      Roles and Responsibilities – Human Resource Focus

      Roles and Responsibilities – Access to Information and Analysis

      Roles and Responsibilities – Communication

      Roles and Responsibilities – Profitable Business Results

      Roles and Responsibilities – Underwriting

      Roles and Responsibilities – Customer Knowledge & Customer Value Added

      Roles and Responsibilities – Exposure Analysis & Profitability Safeguards

      Roles and Responsibilities – Benchmark Pricing

      Roles and Responsibilities – Authority, Capacity & Capital Assignment

      Roles and Responsibilities – Product Quality

      Roles and Responsibilities – Profitable Business Results

      Summary

      Chapter 7: The Gap Analysis Concept

      Lessons Learned from Risks, Claims Large and Small

      Summary

      Chapter 8: A Model to Bridge the Gap

      Customer Knowledge and Customer Value Added

      Exposure Analysis and Profitability Safeguards

      Benchmark Pricing

      The Pricing Process

      Authority, Capacity, and Capital Assignment

      Product Quality

      Profitable Business Results

      Summary

      The Mechanics

      Gap Analysis Spreadsheet

      Chapter 9: Practical Use of the Model

      The Submission

      Summary of First Run-Through

      Beginning to Close the Gaps

      Summary of Second Run-Through

      Closing Gaps from Broker’s Response

      The Quotation – Closing More Gaps

      The Binder of Insurance

      The New Policy – Closing the Gaps Once More

      File Documentation

      Summary

      Examples and Appendices

      Example 1

      Example 2

      Example 3

      Example 4

      Example 5

      Example 6

      Appendix A

      Appendix B

      Appendix C

      The examples used in Chapter 9 and Appendix A, B, and C are presented here. These documents are also available online. Go to: nationalunderwriterpc.nuco.com/closingthegap. Enter password: Analyzing.

      About the Author

      Frank Alexander, B.A., M.Ed., A.I.I.C. is a Commercial Lines Training Consultant. His work in insurance spans over 30 years and has allowed him to conduct workshops throughout Canada, from Halifax to Vancouver.

      Frank has been an Underwriter, Commercial Lines Manager, Quality Manager and Regional Manager. He brings both a Strategic and Profit orientation to Commercial Lines Underwriting.

      He holds a Masters Degree in Education from The Ontario Institute for Studies in Education and The University of Toronto.

      He has done executive studies at The Kellogg School of Business at Northwestern University in Chicago.

      He is an Associate of The Insurance Institute of Canada, and has taught insurance courses for the institute, as well as through Seneca College.

      Frank has served as a School Board Trustee. He is a motivational speaker on a wide range of topics including:

      •  Leadership

      •  Strategic and Operational Planning

      •  Career Planning and Life Skills Development.

      Frank can be contacted at franksda@hotmail.com.

      Introduction

      This book is written by an underwriter, for underwriters. Its purpose is to give junior and intermediate underwriters an underwriting tool to help them develop and maintain underwriting discipline.

      Rather than take the traditional route used in addressing the concept and process of underwriting, it breaks rank and takes a different view of underwriting.

      It is written on the assumption that you come to the work with some experience and knowledge of underwriting, that you have taken the requisite courses, that you understand wordings and coverage, and that you bring all of that background knowledge to the text.

      The book therefore deals extensively with the how of underwriting, in other words the practical, day-to-day application of the body of knowledge you bring to the process. The early chapters look at underwriting through the eyes of the company underwriter. The final chapters provide a gap analysis method for underwriting.

      The book is organized as follows:

      •  Chapter 1 introduces an enhanced view of the role of the underwriter. It sets the market context in which the underwriter operates. It addresses the underwriting discipline and underwriting consistency needed to function successfully in all market conditions, and sets the stage for an understanding of what it takes to be a good underwriter.

      •  Chapters 2 & 3 deal with the core technical and non-technical skills, knowledge and behaviors a good underwriter should possess. Chapter 2 deals with the technical and Chapter 3 the non-technical. Each chapter takes the relevant competency, deals with its importance, and later, in Appendix A, summarizes those skills and competencies in a gap analysis format. This format thereby allows you to use the text as your personal workbook to improve your own skills and knowledge. At the end of the text, in Appendix B, you are provided with sources of information to help you improve your skills. Spaces are deliberately left in this section to allow you to add your own sources as you build your repertoire of reference material. For easy reference we have numbered the core competencies and structured the reference and other sections of the core competency model to track directly to the numbering system.

      •  Chapter 4 looks at the need for a commercial lines plan to govern the underwriting process. It gives a brief assessment of how plans come into being and how they affect your conduct on the front lines.

      •  Chapter 5 gives a brief review of a Strategic Management Model® that is used to create a commercial lines plan.

      •  Chapter 6 looks at the importance of the broker as primary underwriter. It also outlines the roles and responsibilities of both the broker and company underwriter in the underwriting process.

      •  Chapter 7 introduces the gap analysis concept. It draws on the author’s experience in his role as an underwriter who has underwritten thousands of risks and reviewed hundreds of claims and many large losses, and it speaks to the lessons learned from those experiences.

      •  Chapter 8 introduces The Alexander Underwriting Model.® It looks in detail at one approach to underwriting as a gap analysis process. This model is based on the premise that the underwriting process begins with the customer and the development of a thorough understanding of the customer, its operations, its products, and its services. In short, an understanding of the customer’s business. Any gaps in that understanding leads to gaps in all the other Critical Success Areas (CSA) including gaps in understanding of exposures, gaps in pricing, gaps in managing shareholder capital, and gaps in the ultimate price/product/service combination provided to the customer, all of which

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