Life can only be understood backwards; but it must be lived forwards. Søren Kierkegaard
Warning: This post contains insurance language and may induce boredom or nausea. Symptoms will be temporary and the purpose will be clarified shortly. Hang with me.
Every insurance underwriter (UW) I know is a product of his or her experiences. Some of you have no familiarity with underwriting roles, and quite frankly don’t want any. Nonetheless, I’ll provide an over-simplified explanation of the job responsibilities. The discussion will apply to Commercial Insurance, as my knowledge of Personal Lines is limited and the underwriting process is different. Let’s assume you’re a business owner for purposes of the example.
As a rule, your independent agent will meet with you to complete the coverage application. To flesh out details about your operation, he will ask you invasive questions like:
- How long have you been in business?
- What does your product do for your customers?
- Who are your customers? That is, what types of operations buy your products?
Ok. Insert eye-roll. The answers to these questions should not create stress. Most of the questions should be low-key, actually. Nonetheless, UWs do receive incomplete applications on occasion and need to contact the agent to follow up. Sometimes even though all the blanks are filled in, the picture is still not complete.
To clarify, here’s a fictitious set of details for a prospect, as well as my thoughts on said details. Ok, these are what my thoughts would have been as an underwriter. (Keep in mind that all underwriters have their own set of experiences and you are more likely to find 10 identical unicorns than to find 10 underwriters with identical views.)
Application Says
- Landscaping operation
- 3 employees
- 5 riding mowers
- 4 utility trailers
- 2 Bobcats
- 2 backhoes
- 10 pickups
Underwriter thinks
- Good
- Good
- OK, a spare or two is normal
- It’s possible extras come in handy
- Alrighty, but hmmm
- WAIT. What?
- No. Who drives all these vehicles?
Now, there might be a perfectly reasonable explanation for the driver to vehicle ratio discrepancies, but that, in conjunction with the type of equipment, is a head scratcher. There’s no way to connect the dots. Hear me when I say I am casting no aspersions on agents. Years ago, I was one. That said, sometimes they do not have the degree of cynicism that afflicts many in my industry. However, when the agent follows up with the prospect to flesh out the details, the rest of the picture comes into focus.
Come to find out, the operation is landscaping. Well, that’s how the business started. Over the years, additional opportunities led to more equipment and more diverse jobs. Eventually the owner started designing hard scapes and clearing land for new construction.
In the best case scenario, the insured was simply answering questions the agent asked. He had no idea that what he didn’t say would have any bearing on the outcome. There were three employees for landscaping, but there were also additional workers for the other operations. Since most people have limited knowledge of the inner workings of the insurance industry, the omission is understandable. Also, in the agent’s defense, there may have been a number of distractions while the application interview was being conducted.
Of course, neither the owner nor the agent should be expected to think like UWs. That, and the UW who ultimately reviews the application will have already seen dozens of submissions with loose ends just like this one. THAT is why he or she will have antennas up. All the time.
UWs regularly read and document inspection reports and loss notices that spring organically from managing a territory. During this process, that reading material makes impressions that inform future decisions. The UW will want to write more of the type of risks that provide Victorian endings and fewer of the kind that would make Stephen King squirm. Yeah, yeah. Perhaps that’s an exaggeration, but you take my point. And speaking of, there is a non-insurance lesson here, just like there was in a previous post about advice from some of my prior managers.
When we look back at past personal decisions, do we make conscious decisions to replicate the successes and avoid the ones that facilitated headaches? I know what I usually do, and I wouldn’t prescribe it for anyone. Too often I take the path that, at that moment, sounds good. If I’m lucky, my subconscious is at the helm, guiding me. Clearly, that hasn’t always been the case. I can tell you that I’ve made more than my fair share of bad judgment calls and some of them were not unique to the ones that came before.
One that I remember most vividly was when I was about 10, which would make my brother, Nathan, about 13. He was mowing our 2/3 acre yard, as he always did, and offered to give me half of his earnings for that chore if I finished the yard for him. You already know where this is going, right? I did finish the yard and when I asked Daddy for the money, he laughed. “I don’t pay him for mowing the yard.” I’m pretty sure Nathan had successfully negotiated this type of transaction with me before, so why did I fall for it?
That experience had minimal physical or emotional impact, though I still don’t trust my brother to resist involving me in pranks. However, on decisions that really matter–what if I had been consistently disciplined in my personal life over the years? What if I had always compared actions to consequences the way underwriting requires? Would my road would have been smoother? If I had routinely looked back to assess both successes and failures, perhaps I would have had fewer of the latter. Stated in a more eloquent way by John Dewey, “We do not learn from experience … we learn from reflecting on experience.” I need to employ life lessons provided by painfully-poor decisions as well as those well-played over the years. Otherwise, I’m not using the brains God gave me.
Remember the Peanuts’ cartoon clips where Lucy pulls the football away just as Charlie tries to kick? He did it over and over and over. While Lucy is clearly the villain here, Charlie always irritates me with his ridiculously optimist expectations. With each opportunity, he thinks that this time the outcome will change. Recall the saying, “Those who cannot remember the past are condemned to repeat it.” – George Santayana, The Life of Reason, 1905. For sure. My gray cells tell me that paying attention to my rearview mirror can lead to wise choices.
You?
