The Underwriter’s Viewpoint
At the 2016 Advisen Casualty Insights Conference, a panel discussed some of the concerns of casualty underwriters. The panel was:
- Debbie Weiser – President of Excess Casualty – Travelers (moderator)
- Connie Germano – SVP, Head of Specialty Casualty – Everest National Insurance
- Michael Hudzik – SVP, Head of Casualty Treaty Underwriting, Global Clients – Swiss Re
- Patrick Kenahan – SVP, General Casualty Manager, Bermuda – Allied World
- Don Pickens – Chief Underwriting Officer, Global Corporate North America – Zurich
Question: What issues concern you from an underwriting perspective in the commercial auto line of business and how can employers improve their standing with the carriers?
- The biggest factor in auto accidents is the driver. There is no underwriting model that can adequately gauge the impact of this.
- The industry used to give discounts for vehicles with anti-lock brakes. Years later data analysis showed these did not reduce accidents substantially and the premium discounts given more than outweighed the reduction in losses. Because of this, the industry is going to be slow to give premium discounts for future safety advances on vehicles.
- It is unclear what impact telematics will have and if they will ultimately prove to be useful. They have been around close to 20 years and have yet to provide any consistently useful data.
- Employers need to monitor the physical health of their drivers and insist on very strict anti-distracted driving rules including the use of cell phones.
- There is no such thing as safe distracted driving. Even hands-free cell phones increase the risk of an accident.
- Rates were inadequate in the auto line of business for several years and this is leading to poor loss ratios for the industry.
- Jury verdicts seen in auto liability cases have been growing. They seem to look more at the deep-pockets of the insured and insurance carrier vs the actual liability of the accident. This is an alarming trend that shows no signs of reversing.
Question: What issues do you see with aggregate policy limits and the interplay between multiple product lines and the impact this can have on an insured?
- There can be a disconnect between the individual underwriters in product lines and the trends and data available around the total loss portfolio of an insured. An insured can end up retaining substantially more risk than they desire if this is not handled properly.
- We need to be doing a better job harnessing data in this area. The property-cat models figured this out years ago but the casualty models are not to this level yet.
- Carriers want to make sure they are getting paid for the risks they are covering. As an underwriting, you have to consider all the potential risks including those that could exhaust liability limits for a different policy and trigger coverage under your policy.
- Bankruptcy can result in claims being tendered to a carrier that they didn’t intend to cover. When there are large retention you have to consider the financial strength of the insured in your underwriting.
Question: How can the industry address the future loss of talent and the staffing shortages that could result from this?
- Training is of the utmost importance. Not only how thorough the training is, but how quickly someone can be fully trained. We need to speed up the time it takes to get new talent up to speed and ensure they are being properly trained in all areas.
- We need to be tapping into the intellectual capital of retiring employees to pass that to the next generation. There is no substitute for experience so we cannot let that knowledge simply walk out the door.
- The insurance industry needs to consider the changing demographics of their clients and how this can impact losses. A good example of this is the healthcare industry which is dealing increasingly with heavier patients.
- In order to better recruit the next generation of talent into the industry we need to do a better job showing college graduates the variety of opportunities available in the insurance industry.
Question: How do you fully evaluate supply chain exposures?
- You need to make sure that the client’s quality control measures are implemented throughout their production process. Any failure in this area will ultimately impact your insured.
- The distributors could provide an extra layer of potential insurance protection. This will ultimately depend on the language in the contracts. Because of this, it is important for risk management to be involved in such contracts.