Interviews

Stuart Johnson is a well known and highly respected figure in underwriting circles and his move from a direct office to a reinsurer is an interesting and important one, so we wanted to know more about the individual and how he sees his new role.

 

1. Tell us about your background Stuart.

 

I was born in Stalybridge, Cheshire, on 20 September 1961 and emigrated to South Africa with my family in 1968 – I was brought up on the beach with Bob Marley and ‘braaivleis’ (we had an Equity ban and so no UK TV or music!!).

 

I began my career in underwriting with Liberty Life in Durban in 1981 as a trainee underwriter and over the next 13 years progressed to head of research and development in Johannesburg, when I repatriated to the UK to join Pegasus as chief underwriter in 1994.

 

I have held various senior roles within the UK industry, from being involved in start-up businesses, IP specialist and bancassurance. It has been a long-term aspiration of mine to work in the reinsurance market.

 

 

2. You have experience of the South African market. What is the relative importance of the underwriting manager in the two markets?

 

I think irrespective of region or market, it is paramount that the underwriting manager gets to know and understand the market within which they operate. I am a firm believer that a large percentage of business is conducted on the back of relationships and therefore it is essential to establish a wide network. One needs to gain a detailed knowledge of distributors, regulators, reinsurers and services available and equally important, the strengths and weaknesses of your competitors.

 

It’s been a while since I was actively involved in the South African market and apart from the obvious different risks associated with the two regions, I think one of the major differences is that the South African market has far less major players and yet is far more competitive in the risk management area – facultative ‘shopping’ of sub-standard risks is still practiced –‘good thing or bad??’

 

 

3. What made you decide to join PartnerRe?

 

I have worked in the direct market for the past 28 years and it has been a long-held objective to eventually head up an underwriting team at a reinsurer – I very much enjoy the creative side of the role – product and service development, challenging philosophy, being involved in think groups, and so when this opportunity arose, I was immediately attracted after meeting PartnerRe’s  management team as I believe the role will help me to fulfil my aspirations.

 

After meeting with the PartnerRe’s senior management team, I could immediately relate to their strategic aspirations and the direction that they are steering PartnerRe in the life protection arena. I believe that PartnerRe are passionate about working in true partnership with clients in both the UK and Irish markets – to work together in pricing and product innovations and improving risk management overall.

 

 

4. What are the big underwriting issues facing the industry?

 

In the direct market in particular, a major issue is the growing pressure to reduce costs and improve service standards. It is concerning that underwriters are placed under pressure to accept more and more risk, with as little evidence as possible – I appreciate it is unavoidable due to the low margins that are in our products – but we need to watch that we don’t push it too far. Tele-underwriting is a fantastic innovation and becoming more widely used, but there are still instances where independent evidence is still required and the underwriter needs to probably use more judgement now than ever before. This is being exacerbated by the great innovations that are taking place in our product range and  risk management practices – to name a few, introduction of severity based critical illness and partial payments for certain lower grade illnesses, application of discounts where certain exclusions have been applied and covering risks that a few years ago would never have been entertained,  e.g. cover for HIV positive applicants.

 

 

5. And what are the big underwriting issues at PartnerRe?

 

It’s early days for answering this one but from my perspective – to instil confidence to both the UK and Irish markets that we are here to stay and intend to be a strong contender in our field, and that the concept of true partnership is at the core of our values and not just a marketing strap line.

 

One of my immediate tasks is to build a credible team that has intimate knowledge of both markets – some criticisms levelled at reinsurers have been that they are too far removed from the customer journey and the issues facing intermediaries and therefore ideally I would build a team with an optimum mix of individuals from both direct and reinsurance companies.

 

 

6. What have been the best and worse developments in underwriting in recent years?

 

I don’t think that there have been any particularly ‘bad’ developments in underwriting in recent years. If I was to put forward one, it would be external to risk management and more towards the pressures on underwriters and claims assessors to reduce costs. I believe as an industry generally speaking, we have neglected to invest in the training and development of our underwriters – I know of a number of companies that have invested heavily in this area and I salute them – but generally we have taken our eye off the ball on this one and it’s a shame!

 

On the positive side, tele-underwriting has improved dramatically and I fully endorse this development – after all who knows better about their state of health than the customer themselves.

 

 

7. Some years ago there was a view that underwriting engines would effectively de-skill underwriting and that, as a result, the role of the underwriter would be undermined. Has that happened in your view?

 

Absolutely not – in the earlier days these systems were referred to as ‘expert systems’ or ‘intelligent underwriting systems’ but in reality, they have turned out to be point of sale tools primarily to deal with the relatively straightforward cases.

 

Actually, the introduction of these systems has possibly had the opposite effect of de-skilling, as underwriters are now only really assessing the more complex cases, which after all is what they should be concentrating on.

 

 

8. Are good underwriters now at a premium in the industry? If so, is that a good thing?

 

I would say that good underwriters are at a premium now and yes in my opinion it is a good thing.

 

The role of the underwriter has become much more important over recent years – premium rates have reduced by some 60% over the last 15 years or so, the introduction of the DDA and the TCF initiative have all meant that the underwriter has to be far more diligent. Margins are at an all time low and so the standard rates pool cannot afford to be polluted with substandard risks.

 

 

9. How should we encourage young people into underwriting and what would you say are the key appeals to them?

 

Unfortunately as there is no formal tertiary course on underwriting, most underwriters would probably admit that they ‘fell’ into our field almost by accident – I certainly did! Most trainee underwriters come up through the clerical grades within their companies, which is no bad thing.

 

As for key appeals, well it’s definitely a career as opposed to a job – most companies still offer a fairly comprehensive on the job training package and frankly I still believe that it’s one of the most colourful positions in a colourful industry.

 

 

10. Is the trend toward making underwriters more available to intermediaries a good thing?

 

It’s a ‘ticket to the game’ as far as I am concerned! We are all part of the acquisition process and underwriters are a vital part of that process. Some companies have embraced this concept into their proposition and from what I have seen and heard, particularly in the IFA community, they benefit greatly from it. I think that it is our responsibility to help educate on the importance of due care and diligence during the application process around disclosure and accuracy. Generally speaking, if we take the time to explain the rationale behind our decisions, intermediaries come on side as it helps them sell our decisions to their clients.

 

 

11. What can a reinsurance underwriter offer a life office’s underwriting team?

 

Well for the last 20 odd years I have been in a direct office; what I needed from our reinsurers was an understanding of the pressures that my team were under – mortgage completions, commission close-off’s, where we needed to get urgent decisions out to the relevant parties. I believe all reinsurance underwriters should spend time, at least annually, in a busy life office so that we don’t lose sight of these constant pressures. I guess as a reinsurance underwriter, our clients will be looking for a sounding board for ideas, opinions on philosophy and process improvements and speedy responses to day to day enquiries.

 

 

12. A recent Medicals Direct survey found that most underwriters feel that tele-underwriting/interviewing is now at least as valuable as a GPR. What are your views on that?

 

Absolutely – tele-underwriting is a must in every company’s toolbox. As I mentioned earlier, the person that knows most about their health is the client themselves. Scripts and telephone techniques have evolved significantly over recent years and I believe the vast majority of information required to reach an accurate assessment can be obtained via a telephonic discussion with the applicant.

 

 

13. Do you think that underwriters generally should hold a professional qualification?

 

Not necessarily – On the job training and our industry diplomas are more than adequate. It is not so much the acquisition of knowledge that is important in our field, but the application. I have had the privilege of working with some exceptional underwriters over the years with no more qualification than good GCSE grades. It was their passion and enthusiasm to learn and their grasp of how to apply it to their role that made them exceptional.

 

We must however as an industry start to re-invest in the training and education of our underwriters as we did in previous years – this is a great career path and I am extremely proud to be on it.