Relishing the Complexities

The UK property market is a homogeneous place. Everyone is doing the same thing, so the only way to stand out is to provide something that is just that little bit better. How do you do that with underwriting?

At Probitas, we focus on the art of underwriting, looking intently at the skills and complexities involved. Stephen Johnson, UK Property underwriter, evaluates. 

As an industry we’ve always relied on data. Aligning ourselves with hard facts to eliminate some of the emotion from our decisions. It allows us to be objective with our underwriting. 

However, that only works if we are presented with accurate data.  

As underwriters, we are relying on information collected via proposal forms, broker presentations or declarations and, therefore, have an expectation of that information being accurate. It can be easy to overlook the fact that some applicants don’t know, or aren’t sure of the detail.  

As an underwriter, you don’t need to look too far to find examples where the applicants have been aware of critical material information. The Grenfell disaster has really highlighted this to the insurance market, and lessons regarding detailed risk information have been learnt. 

As underwriters, we may find it necessary to see the risk with your own eyes and meet with the client and broker together. Really getting under the skin of the business, allows us to have a deeper appreciation of the challenges on site. This also provides opportunity for constructive recommendations on risk improvement and what can be improved to mitigate potential losses. 

 Flood can also be a contentious area for underwriters. Unlike other carriers, we don’t simply rely on a flood model to influence our underwriting of a risk. Instead, we delve deeper with more questions to understand the reality. For instance, we would ask for: 

• evidence of temporary defences implemented by the client and any permanent local Environment Agency defences  
• consider the location of the site, is it on higher ground, is there a possibility of the client moving to a higher floor in their building, or moving to another location
• information regarding onsite assets and how susceptible to water damage they may be
• details of any processes for early warning alerts and contingency plans that may already be in place
• a history of flooding in the local area, extending beyond the previous five years

It’s further detail, like this, that enables us to understand the bigger picture when it comes to a flood risk. A flood model is black and white, a yes or no, and yet in reality there are so many grey areas which with the right questions, we can take a more pragmatic approach to underwriting the risk. 

In addition, we also need to remember that past performance is no indication of the future. An insured may have 5 years of no claims, but that doesn’t mean the next 12 months will be incident free. A client’s loss experience, over an extended period of time, can be indicative of the Insured’s risk management attitude. And, can usually be a good steer for what can be expected in future years.  

The insured’s information provides just a small proportion of what we need to underwrite a risk. At Probitas, we draw on data from various sources. Working closely with our Analytics team to add an extra level of confidence to our underwriting assessments, especially when it comes to Cat Modelling. 

In an ever competitive environment underwriting becomes an art.

Bringing together the various complex data and information we have at our disposal, and some we don’t, our own experience and knowledge to orchestrate an accurate and fair price for the client is no mean feat. But, it is exactly those challenging decisions that an underwriter relishes!