Reprinted with permission of ON THE RISK, Journal of the Academy of Life Underwriting
The 2014 ALU Life Underwriter Census revealed some startling results about the imminent shortage of underwriters between 2014 and 2019 in US and Canada. As insurers and reinsurers, how are we planning today to replenish the talent pool? This article explores options and ideas to keep the underwriting talent pipeline full and ready for deployment.
I like the Spanish word for retirement – Jubilación! Who doesn’t want to feel great happiness and triumph in the next phase of his life! Me gusta jubilación! However, the insurers and reinsurers are not going to be feeling much jubilation when they start to see their underwriters retiring in the next 5 years.
According to the 2014 ALU Life Underwriter Census1 , we are looking at a 23% decrease in underwriters, which means our underwriting community will be “declining,” (pardon the pun) by 512 underwriters in US and Canada in possibly 5 years’ time. In addition, the census results show that 38% of underwriters have between 21 and 30+ years of experience. What is the conclusion? Our underwriting community’s collective knowledge and expertise will be decreasing by 15,360 years if the average retired underwriter has 30 years of experience. The latter no me gusta!
What’s our 5-year plan to fill this huge gap? The answer: education, training, mentoring and the key – knowledge transfer.
There is some good news though. There were 14% new entrants into the underwriting profession according to the census. The bad news is that over one-third of those involved in training these new entrants will be retiring in the next 5 years. That’s a lot of grey matter loss who will be in pursuit of happiness and triumph!
Some may not be worried about this decline because they believe underwriting will decrease due to simplified issue products and automated underwriting. However, Chris Blunt, Co-President, Insurance & Agency Group, New York Life, states, “Millions of Americans lack individual life insurance, and those who have it often don’t have enough.”2 Unless our straight-through processing (STP) is super slick, there will be lots of cases that will need to be reviewed by an underwriter. Why? Just watch Hungry for Change and Fat, Sick and Nearly Dead on Netflix. We all know we are a sicker population and more people are living with chronic diseases such as heart disease, stroke, cancer and diabetes. These chronic diseases are the leading causes of death and disability in the US. As of 2012, about half of all adults – 117 million Americans – have one or more chronic health conditions. Two of these chronic diseases, heart disease and cancer, accounted for nearly 48% of all deaths.3 At this rate, we will definitely be looking at a limited pool of trained underwriters to underwrite these types of cases.
Insurers and reinsurers will feel the pinch of the decrease in underwriters, and because there are only so many underwriters to go around, we will all be recruiting underwriters from each other. It will be a vicious circle – not to mention the time and energy that goes into recruiting, the onboarding process and the learning curve.
It’s time to rethink about how we replenish the underwriting talent pool. Planning now to ensure we have enough new entrants in the underwriting pipeline is important. Let’s start growing our underwriters!
How do we attract and train the new talent in underwriting? First of all, we need to raise awareness of the underwriting profession with graduates. We should consider targeting graduates in the life sciences programs such as kinesiology, physiotherapy and nursing. This type of background is beneficial as it will reduce the medical underwriting learning curve. Being one step ahead, we really should educate students before they graduate on the opportunities they may have within the underwriting industry. Why aren’t we at every single college campus and career fair promoting our companies and the underwriting profession?
I am not a fan of internships for moral reasons because some, not all, internships have been exploited globally. No thanks! But how about an education internship? Why not create an underwriting education internship program to attract new or soon-to-be graduates? You will be giving students/graduates the opportunity to learn, at your company’s expense, by paying for their industry courses and exams. Studying remotely for the theoretical part of the learning will allow graduates who are nearing completion of their college program to continue with their graduate studies or, if they have graduated and are working part-time, they are still earning money while developing specialized skills for a new career. There is no shortage of insurance industry-specific and underwriting-specific courses between the ALU, LOMA and third-party underwriting e-learning training programs which allows this type of flexibility with learning. During this time, the company and the intern can gauge if the “underwriting DNA” exists or if the fit is there for underwriting. Another added benefit of an education internship is that it’s measurable. You will be able to determine who are excelling and accelerating at their studies. Once the interns demonstrate the willingness to learn and excel at their studies, onboarding will be much easier, as most of the fundamental theoretical learning has already been completed.
You’ve selected a few suitable internship candidates, and they’ve excelled. What’s the next step in building and retaining this talent? Mentoring is the next crucial step! The experienced underwriters in your company should take these “new interns turned underwriters” under their wing and mentor them and accelerate their practical learning. I can’t stress enough about the importance of metrics – measuring and reporting on progress will yield the results. You can’t expect what you don’t inspect.4
Given the hardships we will face with a shortage of underwriters in the next 5 years, it is our responsibility to rethink and plan ahead.
My four ingredients of success for replenishing the underwriting pool:
- Educating the educated - introducing the underwriting profession to the college/university education system by means of an education internship.
- A robust selection process – choosing the right people with the right attitude!
- Mentoring – transfering the knowledge to sharpen the practical skills of future underwriters.
- Metrics – consistently measuring and reporting on progress will accelerate learning and training, driving high performing and knowledgeable underwriters into the declining pool.
“Easy, peasy, lemon squeezy” as my daughter likes to say!
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- 1 Results of the 2014 ALU Life Underwriter Census – Donna Daniells, ON THE RISK vol. 30 n. 3 (2014).
- 2 Forecast 2015 – The Executive Perspective - January 2015 Resource – LOMA.
- 3 Centers for Disease Control and Prevention – Chronic Diseases and Health Promotion, May 2014.
- 4 The Success System That Never Fails (1962) by W. Clement Stone.
About the author:
Carmela Tedesco is Vice President at LOGiQ3. She has managed various underwriting consulting and outsourcing projects at LOGiQ3 which include Operations and Process Review, Audit, Training, Risk Management, Project Management, Underwriting Strategy, Claims, and Workflow Process Review and Implementation. Carmela has over 25 years of underwriting experience in life, DI, CI, structured settlements, health and group underwriting, which spans both the reinsurance and the direct insurance level for the North American, European and Caribbean markets. More recently, Carmela has successfully brought underwriting training to a new level by offering an innovative Web-based, video-training option to life underwriters around the world. For more information visit www.logiq3.com.
Reprinted with permission of ON THE RISK, Journal of the Academy of Life Underwriting (www.ontherisk.com).