Spot the difference for underwriters


This is an aerial view of main location of the risk to be insured: Generic plc.

Company activities at and associated to the premises include: Property Owners; Manufacturing (incl. use of heat & work at height); Assembly (incl. clean room); Warehousing; Import/Export (loading/unloading – incl. quayside); Plant Owner/Operators; Wholesale; Distribution; R&D; Design: IT (mainframe); Admin./Accounts; Training, etc.

For the purposes of the task, let us assume that they are 2, competing, risks both with identical processes, sums insured, limits with similar EML’s, operational structure, growth history, financial performance, global customer/supplier footprint, credit profile, risk management and claims experience. The type of enterprises that are within the target range of risks that you are charged with securing in a competitive market place.

However, one of the risks is, significantly (measurably), more resilient than the other…sufficiently so that it could provide you with the competitive advantage required to secure the account. So, as an insurance, credit or financial risk underwriter:

Q. How do you identify and differentiate between the good and bad risk, providing a verifiable basis for an underwriting decision that enables you to win the business?

‘Good risk’

‘Bad risk’

Winning and losing in such a competitive market is important but so is the impact of picking up a £50m loss (where, with very little additional effort, the exposure could have been reduced) in such a volatile and uncertain economic climate!

Isn’t prevention always better than cure…or, at least, less costly than under-priced protection??? 

So, this is a serious question and I would, genuinely, love to receive some considered, even technical answers…but I’m also open to the less serious or downright facetious varieties!

Whilst you (hopefully) ponder the question and think up a smart answer, here are some facts (below) and further information to help stimulate your brain.

Risk v Resilience [infographic]

If you need to ask me any questions, feel free and IF your imagination is sufficiently “fired” as to novel applications, share them, publicly or privately.

This is a high stakes game that is far more complex than the pseudo-scientific techniques that form the bases of “conventional wisdom” employed in the Financial Sector.

“Both insurers and insurance intermediaries need to fundamentally rethink how risk is assessed”

Achim Bauer, PwC

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