2016 Intern OrientationJune 1 – 2, 2017
Underwriting 101
Nick Abraham
Markel
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Goal
Overview of the Fundamentals!
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Underwriter Job Qualifications
• Analytical skills
• Decision-making
• Personality (dynamic and likability)
• Bachelor’s Degree and insurance designations
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Underwriter Responsibilities
• Profit and growth for your individual portfolio
• Know and understand the underwriting guidelines, policies and procedures
• Individual risk assessment and loss analysis
• Cross sell with other product lines and underwriters
• Marketing and building relationships with brokers
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Profitability
• Individual Risk Underwriting
• Portfolio Management
• Training & Professional Development
• Forms & Endorsements
• Flexibility without sacrificing profitability
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Portfolio Management
• Accident Year
• Loss Triangles
• Frequency / Severity
• Class Segmentation
• Rate Changes
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Property Underwriting
• COPE Analysis
• Primary Buffer Excess Deductible Buy Backs
• Cat vs. Non Cat
• All Risks vs. Named Perils
• TIVs, Limits, Amount Subject, PMLs
• Know the properties and areas you write
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Case Study #1• Property Case Study• Which account would you rather write and why?
• #1 – Brady Lumber Yard is located in Warrensburg, MO. Brady Lumber has a 20,000 sqft wood frame building that contains there office, inventory, cutting, and treating operations. The requested replacement cost value of the frame building is $400,000. Inventory is $5mm. This building is located in an ISO protection class 3, and has fire hydrants and smoke alarms on site. Building materials dealers maintain a Best’s hazard index of 8/10 for fire exposure due to the presence of highly combustible stock.
• #2 – Justin’s Bakery is located in Kansas City, MO. Justin’s 5,000 sq ft masonry building contains a kitchen, register, display and seating for thirty people. The requested replacement cost of the building is $375,000 and business income limit of $500,000. The building is located in an ISO protection class 2, and has smoke alarms and automatic sprinklers. Bakeries maintain a Best’s hazard index of 6/10 due to multiple ignition sources and heavy fire load.
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Casualty Underwriting – Loss Exposures
• Bodily Injury vs. Property Damage
• Single Person vs. Multiple Person
• Horizontal vs. Vertical
• Residential GC in California
• Roofing Subcontractor
• Tree Chipper Manufacturing
• Restaurant
• Pharmaceutical Manufacturing
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Case Study #2
• Frequency vs. Severity/Multiple Person vs. Single Person/Light PD vs. Heavy PD
• Ski resorts • Foundation contractor• Medical implants Mfg• Nutraceuticals• Helmets• Toy Mfg• Nightclub• Bar with a deck• Machinery installation/industrial contractor
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Loss Analysis
• Loss Reserves – Case (Loss & Expense) + IBNR
• Not all loss history is created equal
• Analyze the details of large losses
• Coverage, Liability, Damages, Venue all play critical factors in claims
• Loss Rating – Currently valued losses X Trend X Development
• Trend – Inflation
• Development – Loss Development Factors
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Questions so far?
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Mad Skills
• Mathematical• Analytical• Decisiveness• Solutions• Knowledge• Innovative• Likable• Leverage• Selling
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Mathematical
• ISO Rating• Rate Making• Loss Rating• Loss Triangles• Exposure Rating• Judgement Rating• Rate Chance• Risk Modeling• Reinsurance
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Analytical
• Selection– Underwriting the risk
– Vertical/Horizontal
– Multiple/Single Person
– COPE
• Attachment Point
• Price
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Decisiveness
• Paralysis by analysis
• Rational Thought
• Fundamentals
• Not being afraid to make mistakes
• Having conviction
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Solution Provider
• Identify problems
• Out of the Box
• Value Added
• Save the Day
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Knowledge
• Policy Forms• CPCU & ASLI• Learning from
Mistakes• Expertise• Classes of Business• Trade Journals• Seminars• Network• Competitors/Earnings
Calls
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Innovation
• Finding a better way to do things
• Technology
• Efficiencies –working smarter
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Likable
• People like doing business with people they like
• Common interests• Sporting events• Spa Days• Golf• Concerts• Happy Hours
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Leverage
• Putting everything together
• Building relationships
• More expertise gets top accounts
• Top Performers get Top Brokers
• Snowball effect
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Sales
• Solution Selling
• Image
• Professionalism
• Knowing how to say no
• Reputation
• Impact & Influence
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The It Factor
• Fire in the Belly
• Maniac with a Mission
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Questions?