We took a good hard look at underwriting. We watched underwriters going about their daily work. If you can imagine the scene where there are guys in white lab coats, with stopwatches and clipboards in their hands, looking at our underwriters like they were "a bug in a bottle", you would not be too far from the truth.
Not surprisingly we found out, that underwriters only spend about 15% to 20% of their time working on the business that we actually want to write! You see, if you have a good agency force, the agents are sending you things that are already prequalified and they have a good idea that your pricing is good. This kind of risk, takes only seconds for the underwriter to say yes to.
But it is human nature to make the work fill the time available. This is where the danger comes in. While the underwriter is spending a lot of time trying to help the agent makes the risk fit, there is too much slack time. It turns out that the underwriters spends the bulk of their day, trying to find a way to fit marginal risks into the program. This is despite the fact, that we have to hold our regulators, reinsurers, actuaries, and everyone else in the transaction just what our underwriting appetite is.
What I would desperately like to know, is what the underwriting results are for that business that underwriters have squeezed in to the margins compared to the good clean stuff. I don't have any hard data to support this, but I suspect that the losses are much better for the in the box risks that the underwriter has spent little time on then the out of box risks where the underwriters spends all their time.
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