INSURANCE | 02.09.2024
Risk underwriter: the pivotal link between customer needs and business profitability
There is a professional tasked with assessing insurance risks, striving to find a delicate balance between meeting the client’s needs and ensuring the profitability of the business. This role, known as the risk underwriter, is gaining prominence in the digital environment.
Under the motto “Rebuilding Trust”, the recent World Economic Forum (WEF 2024) meeting in Davos, Switzerland, has once again brought together governments, businesses, and civil society to address global problems.
Beyond urgent concerns like security, cooperation in a divided world, the energy transition, and the disruption of artificial intelligence, another crucial issue has surfaced: job creation in the new era. A white paper, jointly published by the Forum and Capgemini, places the role of insurance risk underwriter among the top 17 highest-paid and globally accessible professions by 2030.
But what lies beneath the surface of the insurance underwriting process and this particular role?
When a prospective customer approaches an insurance company to secure a product, insurers initiate an analysis and assessment of the level of risk associated with the policy, a process overseen by insurance underwriters.
According to Ángela Jiménez Escobar, an underwriter at MAPFRE Global Risks, their mission is “to provide insurance solutions ensuring proper risk acceptance by gathering and evaluating sufficient information. This includes establishing insurance premiums in line with current policies, relying on personal judgment, experience, market insights, and leveraging available actuarial and statistical tools.”
This responsibility may vary depending on the product and its complexity. In general, as explained by Vanesa Sánchez Conejero, a senior underwriter at MAPFRE Global Risks, this professional “conducts a preliminary business analysis to determine alignment with the business model and the risk the insurer is willing to undertake. If affirmative, the underwriter proceeds with the underwriting analysis, a standardized process for each area or branch, subject to mandatory compliance rules. It is the underwriter's responsibility to ensure these rules are adhered to.”
Throughout this procedure, factors such as the customer’s profile, their relationship with the company, business aspects, and more are scrutinized. Other considerations include loss experience, legislation, current regulations, statistical data, etc. Once the risk associated with insuring the customer is calculated, the contractual phase begins.
However, there are instances where, after assessing potential risks linked to the insurance, the subscription may be declined in accordance with regulations, technical criteria, authorized subscription limits, and other relevant factors.
The role of the underwriter is pivotal within insurance companies, as it involves striking a balance between customer demands and business profitability through meticulous risk analysis. In addition, underwriters may:
- Offer support to the sales network by addressing inquiries related to coverage and assisting other operational departments.
- Monitor contracts throughout their duration to identify potential changes in risk.
- Leverage their experience to provide recommendations to their insurance company, ensuring that coverage aligns with the appropriate level of risk.
What specific qualifications and characteristics should these professionals possess to carry out their responsibilities adeptly and effectively?
The list can be extensive, but at a minimum, underwriters must possess a robust technical knowledge and stay abreast of the latest trends in insurance and regulations.
Undoubtedly, they are experts in analyzing and selecting risks, drawing from a variety of factors, and demonstrating excellent research and classification skills.
In addition to making informed and impartial decisions based on objective criteria, they need to excel in working under pressure within a fast-paced environment. And effective communication skills are essential for conveying decisions, which can sometimes be sensitive.
Therefore, to excel in their role, underwriters are required to have a comprehensive set of technical, analytical, communicative, and ethical skills and competencies. This ensures their ability to thoroughly assess risks and make decisions that serve the best interests of both the insurance company and its customers.
New technologies are a cornerstone in supporting the daily tasks of the underwriter. As noted by Vanesa Sánchez Conejero, “they are essential for more precise underwriting." Additionally, these technologies streamline the process, resulting in increased customer satisfaction.
Ángela Jiménez Escobar underscores the benefits, stating, “Automation in the underwriting process has made our work more agile, improving consistency in risk acceptance."
At MAPFRE, we actively contribute to this forward-looking profession — as affirmed by the latest Davos forum — by equipping our professionals with tools and technological solutions that foster agility and remote work. At the same time, our focus remains on delivering efficient service to clients right from the initiation of the insurance contract.
Now acquainted with the intricacies of the insurance underwriter's role, consider sharing this promising profession!