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May 6, 2016

How to Cope With Shifting Appetites

Summary:

Carriers' appetites for certain risks shift constantly, and brokers often can't keep up. A new sort of search engine can help.

Photo Courtesy of Lucas

It’s the nature of our industry that commercial insurance carrier appetites are constantly evolving. As business landscapes shift to accommodate emerging risks, insurers must continuously refine their specialties, products and services. It’s a necessary part of risk transfer; yet it can be confusing for a carrier’s distribution partners.

Because commercial insurance agents and brokers deal with dozens–and sometimes hundreds–of different carriers, they often find themselves struggling to stay abreast of shifting appetites. Brokerages of all sizes struggle to overcome the hurdle posed by “appetite clarity,” and carriers and managing general agencies (MGAs) struggle to find a simple method to demystify the situation.

See Also: Next Generation of Underwriting Is Here

Carriers and MGAs need to evaluate opportunities to leverage online search tools that can integrate into an agent’s daily workflow and enable insurers to communicate appetite. Such tools, like IVANS Market Appetite, operate similar to current search engines. At the start of the search process for a market for new and renewal business, the tools provide agents with an instant list of carriers, MGAs and wholesalers with appetite for the specific risk. These tools can help underwriters overcome the “three major hurdles of underwriting”:

Hurdle #1: Changing Appetites

The carrier or MGA says: “We made substantial changes to our appetite more than a year ago to move away from an industry segment that wasn’t in our specialty wheelhouse. Yet I’m still seeing a high volume of submissions in that category that I’m having to decline. It’s hurting my conversion ratio and confusing my brokers.”

Problem solved:

It takes significant time for changes in appetite to be effectively communicated through a carrier’s network. This requires changing every piece of collateral, market guides and online postings and redistributing the updated assets. Many times, appetites change again in the time it takes to update these assets, exacerbating the issue.

Carriers and MGAs need to leverage online tools that instantly communicate their latest appetite, ensuring products are visible to agents when they begin to search for a market where they can submit their risk. Consistent appetite visibility through online tools also improves carrier and MGA staff’s productivity by increasing the number of in-appetite inquiries and reducing time spent reviewing submissions of no interest, while enabling carriers and MGAs to focus more time on returning quotes and building relationships.

Hurdle #2: Limited Relationships

“I am worried that my competition has a broader network of brokers than I do. I truly value the partners I do have, but I would like to grow my book, and I wish I were seeing more new risks.”

Problem solved:

Even with formidable communications and relationship strategies, carriers can be complex to navigate from the outside, and brokers who have strong relationships with one division may overlook the opportunity to bring an alternative submission type to another business unit. Online market search tools enable underwriters to get in front of brokers and agents that they haven’t interacted with before.

Hurdle #3: Unwanted Submissions

The carrier or MGA says: “I wish I had more time for new business. I spend hours reviewing submissions that ultimately need to be declined. On top of that, I have a thick stack of renewals to get through. There has to be a less time-consuming way to get more profitable new business into my book.”

Problem solved:

Carriers’ and MGAs’ time, and brokers’ time, is exceedingly valuable. IVANS found that 60% of submissions in commercial insurance go unquoted – resulting in significant time wasted on non-revenue-generating activities. Online market search tools increase in-appetite submissions to drive better submissions in the pipeline, allowing carriers and MGAs to focus on the most profitable lines of business and industries. As the market changes, these tools ensure consistent representation of carriers’ and MGAs’ latest appetite, so submission mix remains strong as agents are continuously kept informed.

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About the Author

Matt Foran is vice president and general manager of IVANS Market Appetite, a division of Applied Systems. He is responsible for the creation and strategic execution of the cutting-edge distribution platform built for the commercial insurance industry.

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