View from the Top - Underwriting discipline is only partly to blame.

(From Post Magazine)

Byline: Stephen Fitzgerald, managing director, DA Constable Syndicate.

We know that underwriting conditions are becoming increasingly difficult and, naturally, the finger is pointing towards a failure in underwriting discipline. When challenged, the management of some insurers have responded by acknowledging the problem and identifying training and competence as key factors.

This is only a small part of the answer to a complex question. It would seem to suggest that soft markets are instigated by inexperienced underwriters but surely this is not the case. Inexperience may be a contributory factor but the downward trend in pricing is initiated by those who have the status, the power and the authority to compromise pricing - people who may have witnessed a number of cycles. In other words, it is the senior managers and their underwriters who not only create but sustain this momentum.

We must, therefore, look more closely at what is influencing the decisions underwriters make on a day-to-day basis. Is it a lack of direction and decisiveness at the top or a desire to match or beat financial targets set in more benign environments? Is it a drive for market share at all costs? Has complacency set in following a few years of getting it right?

We should look at all these factors before hiding behind training and competence.

So ...