Grant Ellis: The rocky road back to professionalism

It amazes me that since I started work as an insurance broker almost 35 years ago, the process of broking commercial business has hardly changed. Sure, we’ve found quicker ways of passing information between broker and underwriter – by email, fax and so on – but fundamentally it’s still a very manual process.

What has changed is the professionalism and expertise of both parties. Thirty-five years ago, most people who worked in the profession received a good level of formal training that safeguarded minimum standards. Regrettably, that no longer applies.

So I have been very interested in the lessons learned from our Network Trading Room pilot, launched in Yorkshire this summer. In a controlled environment, 50 brokers and six insurers have agreed to third-party scrutiny of their interaction while handling non-package commercial business.

The upshot is that we should all feel ashamed. This has led me to the question: are we a profession?

Brokers first. The monitors scrutinising the pilot assess all submissions received before they are passed on to underwriters, and remove any with inadequate information to underwrite the risk correctly. Unfortunately for some brokers, 80% of their submissions fall into this category.

The monitors must then obtain the missing information, and it is apparent from their enquiries that the people compiling the submissions often do not have the level of knowledge, understanding or experience to complete the task satisfactorily. This is a problem for brokers because ultimately it means they are not getting the best prices from the underwriters.

Now to the insurers. Underwriters often cite an incomplete submission as a reason not to provide a quotation. In our study, the monitors ensure that underwriters have all the information they need to respond to every submission within any reasonable deadline set. The challenge we have is that in the open market it has become common practice for underwriters to simply bin large numbers of submissions without making any attempt to consider them. It’s almost become accepted behaviour – outrageous!

Doesn’t this strike you as an enormous waste of everybody’s time? Perhaps even more pertinent, isn’t it also a waste of so much opportunity?

The irony is that the technology exists to put this right, and has done for some time. But changing habits is hard. Some brokers will continue to operate to low standards as long as there are insurers willing to accept them. Meanwhile, expecting underwriters to want their jobs to be taken over by computers looks, at face level, like expecting turkeys to vote for Christmas.

Adopting IT to streamline the process will not remove an underwriter from the process, but allow them to spend more time on fewer more complex risks. This will improve their expertise and raise their earnings.

Brokers should expect – no, demand – a response to every submission they make, but they too must ensure they are providing all the information an underwriter needs. Far too many adopt an approach of ‘throw some mud at the wall and eventually some will stick’. Don’t they see what this does to their reputation with underwriters?

This pilot allows the participants to see their shortcomings. Before it, there was little opportunity to do so and it was far too easy to blame someone else. It has been an uncomfortable journey for some but the good news is that standards are starting to improve.

So, come on. We’ve got to stop this approach of blaming one another. While the Aldermandbury Declaration is a start, we all need to recognise that we have shortcomings that need to be addressed. Only then can we once again aspire to being a profession rather than an industry. IT