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The Technical Side of Underwriting

The Technical Side of Underwriting

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The Technical Side of Underwriting

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  1. The Technical Side of Underwriting H. Elizabeth Mitchell, FCAS Casualty Actuaries in Reinsurance Seminar - June 10, 1999

  2. Underwriting Myths

  3. Underwriting Myths • A good golf game is an underwriter’s greatest asset.

  4. Underwriting Myths • A good golf game is an underwriter’s greatest asset. • Actuaries are not business people.

  5. Underwriting Myths • A good golf game is an underwriter’s greatest asset. • Actuaries are not business people. • Actuaries are always more conservative than underwriters.

  6. Underwriting Myths • A good golf game is an underwriter’s greatest asset. • Actuaries are not business people. • Actuaries are always more conservative than underwriters. • If there is no data, the actuary has nothing to contribute.

  7. Definition of Underwriter • Risk Selection • Identify & Evaluate Hazards • Establishing Prices • Determining Terms and Conditions • Marketing / Client Relationship Manager

  8. Traditional Knowledge Hazards & Potential for Claims Underlying coverages & policy forms Know reins. Contracts People skills Market Savvy Negotiating Skills Underwriter’s Skill Set

  9. Traditional Knowledge Hazards & Potential for Claims Underlying coverages & policy forms Know reins. Contracts People skills Market Savvy Negotiating Skills New Skills Problem-solver Knowledgeable in all product lines Conversant in legal, regulatory, tax and accounting issues Superior negotiating Underwriter’s Skill Set

  10. Quantitative Underwriting ???? Quantitative Analysis Casualty Property Risk Selection Facultative Treaty Finite

  11. Underwriting Mistakes • Balance

  12. Underwriting Mistakes • Balance • Minimum Rate on Lines

  13. Underwriting Mistakes • Balance • Minimum Rate on Lines • Price doesn’t matter for a good risk

  14. Underwriting Mistakes • Balance • Minimum Rate on Lines • Price doesn’t matter for a good risk • There is no price/structure for a bad risk

  15. Summary • Do not need to be an actuary to be a good underwriter. • But quantitative skills of an actuary do contribute to successful underwriting. • More technical and competitive marketplace • Team Underwriting