When I think of an underwriting department I often remember photos I’ve seen of large rooms filled with rows of small desks staffed with people wearing white shirts and thin black ties. Processing what seems like mountains of paperwork, moving one piece of paper from one side of the desk to the other. Ok, I admit it, I’m old. For me the underwriting department of old certainly conjures this type of vision. A sort of assembly line. It’s not like that anymore! The job of underwriting workers compensation insurance is constantly changing and keeping up with those changes means constant education. Let’s talk a bit about training workers compensation underwriters.
I’ve had the pleasure of working with some great underwriters over the years. Folks who really knew their stuff. You could ask a question about classification codes, rating, payroll limitations or just about anything and they would know the answer. And the great thing, if they didn’t know the answer, they knew where to find it! After all, isn’t that really what it’s about.
A workers compensation underwriter has to process a great deal of information about a client in a very short period of time. Gaining a high level of understanding about a risk presented to them is one of the foundations of successfully underwriting this type of insurance product. Today’s underwriter has at their disposal more tools than ever before to help analyze a new or renewal client. But having that information and knowing how to use it doesn’t really make a great underwriter. Perhaps it’s having that information and knowing WHY to use it that really counts!
Like other professions, underwriting is a never-ending process of learning. For workers compensation it begins with learning the basics. Learning what workers compensation is and why it exists. Then learning the mechanics, how to rate a policy, what goes into the structure of a policy, the parts that make up the policy like endorsements, the policy contract and even the policy jacket. Learning the importance of entities, employers and insureds and how they play into the picture. More advanced underwriters move on to learn how rates are developed, where loss costs come from and why they are important. They learn about experience rating and how the EMR is developed and the role it plays in the over all premium development phase of the policy. They learn the role contracting credits play and the importance they are to controlling an employers premium. The learn how and why scheduled credit (IRPM) exists, how to use it and why. An underwriter must have knowledge of the effect claims has on an employer and the insurance company. They must learn the traits of a good quality risk a marginal risk and a poor risk.
Perhaps one of the most difficult things for a new workers compensation underwriter to understand about this product is how closely it’s tied to state laws. You see a standard workers compensation policy is only 6-8 pages long and wording in the policy refers back to the workers compensation laws of the state where the policy applies. The policy gets its power from state laws and that confuses most new underwriters. Another problematic part is understanding that rules governing workers compensation are developed and oversight is provided by individual rating organizations or rating bureaus.
Workers compensation insurance is so unlike other insurance products that some new underwriters become confused. With the advent of predictive modeling and smart underwriting systems being relied upon by more and more insurance carriers there is certainly a fear that new underwriters will no longer have the knowledge level or understanding of how the parts fit together.
That’s why the educators and workers compensation trainers become so important. It’s the trainers and educators who teach new underwriters all the items I’ve mentioned above. It’s continuing education, provided by individual insurance carriers for their employees and agents along with outside independent course work, that sets the foundation for the future of workers compensation underwriting.
Here’s to the trainers and educators! It’s a never ending job. Keep up the good work!
Hope this helps you out and thanks for reading!
