A day in the life of a future underwriter
I log on and the Assistant has three code reds to look at already. I normally only have one at the most waiting for me, so I know it’s going to be a busy day.
A lot of business is changing hands at the moment and after a managerial catch-up yesterday we dialled our appetite up a little overnight.
My first reaction is that we might have overcooked it.
I’ll see how it goes and will flag it up to James the CUO if many more red ones arrive in the next hour or so. Code red is what we have defined as a risk that is bang in appetite – the right risk in the right place at the right price adequacy.
I open red one – it’s a good risk that we used to be on until a few years ago. It ran really nicely but was spirited away somewhere into the depths of a buyer’s market.
It looks okay – above average rate and the exposure feed is clean. It has real-time data and a historical set that goes back 20 years, second by second if I want.
The feed has already been attached to Big Liz, our analytics engine.
She says it’s running sweetly and at this price the attritional loss cost should only be 12%, against a portfolio average 21%. Although she says cat potential is a little on the high side, she also reminds me that this is a target blue-chip client.
I think this one is good to offer my max line.
So I hit the offer button and head to the coffee machine.
A minute later the line is taken up and signed 95.667%. Settlement of premium is T+1 (tomorrow).
Not bad for 5 mins work.
Ping! My exposure ticker warns me that the deal has just pushed my aggs in Brazil through 80%.
I’d better see about that because the Assistant overview is telling me that a chunk of Brazilian agg is also lurking in the next two reds in the queue. I know I can’t go overlined but it is seriously embarrassing to make your boss’s screen flash red on a Tuesday morning – and to have to explain to your best brokers what a fool you are!
Given how red one has gone I reckon I’d better be ready for more firm orders, so I launch the reinsurance (R/I) rover into market to look at some options.
Maybe we need a bigger treaty limit for Brazil or perhaps fac is going to be more efficient this time? Whatever it is I will have options and a go/no go chat on this with James before lunch.
Beep! That’s him now.
“Hey Mark. After last night I was keeping an eye on your pipeline this morning – looks like we did have a bit of a rush of blood. Maybe everyone else knows something we don’t?”
“Or maybe we know what we want and no-one else has worked it out yet?” I counter.
“Maybe right. But let’s take it back up a notch and see if there isn’t more money on the table. You look at your other two reds while I dial appetite back up a smidgeon”
I smile, he’s a good guy and has been around the block a few times. He ran things back when we were analogue, or the dark ages, as I and the younger underwriters call it!
I’m learning a lot here. The algo might say it’s a write but only a human would think to double-check that the market won’t take a few points more of premium first.
The day an algo gets greedy is the day we all go home.
I check the next two reds – both great writes and my offers are taken up in a flash. The boss clearly has a point.
The R/I rover is back – looks like we can fac the top half of these three out and not only will it slash the agg back under 70%, but Liza says that at these prices it increases theoretical profit by 3 combined ratio points.
James has already said go for it. I hit buy and we’re done.
Looks like we dialled too far back the other way because I only have a meagre stash of ambers now.
Ambers are largely marginal stuff – but sometimes there are a few diamonds lurking so I rummage around for the rest of the morning, looking for anomalies – and bargains!
I have a couple of hits, a few more misses and send out three re-quotes so that at least the broker has an option when they come up short (and according to Liz, there is a 96% chance that they won’t fill the order at those prices).
After lunch there’s a get-together I’ve been looking forward to.
One of our renewable power generator clients has been having troubles that have been making us all scratch our heads.
Their attrition has been climbing fast and we’re all worried that this is the prelude to something really bad. We set our best engineering and data team on it. They plugged themselves in and have been real-time monitoring for a week now.
Today they are going to give us some thoughts and we have the client’s engineers and risk manager and the claims and placing brokers on the call.
It turns out there was a pattern and it’s all about turbine start-up. It’s a bit technical, but our team compared the client data with similar turbines we insure as well as augmenting it with third party data.
Long story short – they have been starting too cold and this has been causing trouble.
The client is over the moon – this is not a problem they knew about and the manufacturer had been no help whatsoever.
I am pretty happy too – this was starting to cost me and we’ve avoided a much bigger loss. Nothing needs replacing – they just need to run it a little warmer on start-up and the stressing will be history.
I put out an advisory to all clients with the same turbine to let them know
Now that’s what I call added value.
Now for the icing on the cake. Finance has analysed my book and is offering me to take half my bonus early!
I love this job!
Maybe the above is fantasy, but none of the tech I have described is fictional and the piece was inspired by a listen to the AdvantageGo Special Episode of the Voice of Insurance Podcast on the Future of Underwriting with James Slaughter, CUO at Apollo Syndicate Management and Silvi Wompa Sinclair, Group Head of Portfolio Underwriting at Swiss Re.
I’d say the time to start preparing for this kind of future is right now.