accurate underwritingThis article follows up on our previous article How Underwriting Accuracy Improves Profit & Growth. In that article we shared how inaccuracy in underwriting judgements undercuts a carrier’s profitability.

In this article, we examine some of the root causes of inaccuracy in underwriting judgements, as well as how improving consistency will make agents happier with your underwriters, resulting in more business.


Perhaps the biggest barrier to carriers achieving optimal underwriting results is the ability to accurately define and communicate their appetite. We would argue that the executive and management teams own a greater share of accountability for setting the organization’s underwriting appetite than do the underwriters.

While individual underwriters must be held accountable for properly understanding, communicating, and reasonably following the corporate appetite, overall product, pricing and selection guidelines are overseen by executives and set by the product development/actuarial teams.

If management and product development teams set sub-optimal rates and product, they automatically instill bias into underwriting results. From the outset, rates and selection decisions will be inaccurate. They will be consistently inaccurate, but this will likely be of little comfort because the company will either be too competitive—leading to underwriting losses—or too conservative—hindering growth and prosperity over the long term.

Even though this bias has a huge impact on company profitability and ability to grow, it is largely out of an individual underwriter’s control. The underwriting executive team owns the responsibility for developing a clear and effective underwriting appetite that is then properly communicated to your underwriting teams.


Within the insurance transaction process, the underwriter’s role is to ensure that the total of their underwriting decisions lead to profitability. As such, they have a certain amount of latitude in their decisions, allowing them to balance underwriting accuracy with encouraging the agents to place business with their company. If there is a small amount of bias baked into the company’s appetite, individual underwriters can use their judgement to mitigate some of the bias and improve underwriting results. They can quickly adapt to any situation by adjusting their judgements on individual transactions. This can give the executives and product/actuarial teams some time to make necessary changes and get these changes approved.

However, with any positive comes a negative. As pointed out in the book Noise, underwriters’ individual judgments can vary widely, even given similar cases.

Their decisions are impacted by their relationships and individual transaction negotiations with the distribution network. To both grow their book of business and achieve an underwriting profit, they must balance the pressure from very persuasive and aggressive agents and from their own managers.

As humans, underwriters are subject to a wide array of conscious or unconscious biases. Some are by nature more conservative than others. All have different life and professional experiences that impact how they react. Even the best underwriter’s decisions can be inconsistent from one day to the next.

But does this really matter to agents?


In our research, agents constantly tell us how much they value consistency from underwriting. Here are a couple of representative comments from agents describing why they prefer the carriers with whom they routinely place business:

“They communicate their appetite clearly and consistently.”

“When I call in to get help on a quote/policy, I always speak to the same handful of reps, and they are CONSISTENT with their knowledge.”

Simply put, consistency in underwriting decisions leads to placing and keeping more business.

On the other hand, inconsistency in underwriting judgments creates inaccuracy in:

  1. Rate adequacy
  2. Coverage structure
  3. Risk Assessment
  4. Loss Control

And as Noise points out, inaccuracy leads to poor underwriting results, making underwriting consistency a worthwhile goal from both profit and growth standpoints.

Also, from a talent retention perspective, it’s no fun to be an underwriter when you can’t grow your book of business or achieve your underwriting profit goal.

Carriers can decrease inaccuracy created by individual underwriters’ biases. Our next article will include a couple of examples of how this can be accomplished.

Underwriters want to be winners. Those worth keeping will value any tools that help them make more accurate decisions.


Judgements of individual underwriters vary widely. If you can help your underwriters improve the accuracy of their decisions vis-à-vis your organization’s appetite, you will improve underwriting profit and growth.