accurate underwritingPreviously in this 3-part series we discussed how inaccuracy in underwriting judgements depresses profit and growth for insurance carriers. Then we explored some of the root causes of inaccuracy and the importance of achieving greater consistency.

Today we present strategies that carriers might use to improve accuracy while still allowing for reasonable flexibility in underwriting.

It is unrealistic to think we can achieve 100% accuracy in our underwriting. Almost all insurance carriers lack the data to be that precise. Too many variables exist that companies and individual underwriters cannot predict or control.

However, if the median difference between pricing judgements of two underwriting professionals in the same company is 55% — as observed by the authors of Noise: A Flaw in Human Judgement — then what if we set a goal to cut it from 55% to 45% . . . or 35%? This incremental improvement should translate into increased underwriting profit and growth.


Responsibility for driving improvement in accuracy falls directly on underwriting leaders, starting with how well you define and communicate your appetite. Then, look for ways you can change the underwriting decision process to empower underwriting professionals to make consistent decisions.

While we want to increase accuracy, it would be a mistake to sacrifice individual underwriting analysis in the quest for precision. We need to give underwriting professionals the flexibility to adjust for unforeseen circumstances. If you tell underwriters exactly what decisions to make, you remove the challenge from the job, telling them they are not necessary. This will take the fun out of underwriting and, as a result, you will lose your best underwriters. You are also taking away their ability to negotiate with agents  to close new accounts and renewals. If you seek precision rather than accuracy you must be sure your appetite and rates are precisely correct.

Individual carrier situations vary considerably, but there are things underwriting leaders can provide to the underwriters to improve accuracy. Look for ways to give underwriters more transparent and actionable information about what is going on around them. Now that more underwriters are operating remotely or in hybrid working environments, transparency is even more important. Before, when most underwriters were in the office, they could more easily bounce ideas off others and get their input.

Leaders  can arm underwriters with useful and easily accessible data to bring more context to their decisions. If they are making decisions without considering others’ assessments of similar situations, then they are more likely to have greater variability in their judgements.

Here are a couple of ideas to consider:

  1. Give underwriters more data that puts their decisions in context with other decisions.
  2. Encourage collaborative discussions between underwriters.


You can share data showing underwriters the similar decisions they made in the past and decisions that their peers are making now.

This tactic will be even more successful if you can provide some scale. Take, for example,  a pricing decision. What were the lowest, average and high prices used by the underwriter and compare that to the low, average and high prices used by their peers.

If an underwriter is weighing whether to make an exception to their selection guidelines, you could share the frequency of that type of exception previously made by that underwriter and compare it to the frequency of the exception made recently by their peers. Reviewing similar business decisions from the past will help them maintain greater consistency in their own decisions from one day to the next. Sharing the actions taken by others will give underwriters the information they need to make more accurate decisions within the context of their team.


For underwriters working on larger or more complex risks, consider having 2 or 3 experienced underwriters look at the same file independently. Then have them get together and discuss their decisions. The more similar their decisions, the more confidence you can have in their accuracy.  However, their independent decisions may vary significantly. If so, and if they work together to close the gap, the end result will be more accurate.


Arming underwriters with information on their previous decisions and the decisions of others will help them improve their accuracy. This will improve profit and growth.