Education For Underwriters: Priority? Luxury? Nuisance?
Hank George, FALU, CLU, FLMI
August, 2008
“…every dollar spent on training and development per employee results in an increase of $168 in revenue per employee.”
Jennifer C. Rankin
LOMA Resource magazine
June, 2008:16
The issue of underwriter education has had a renaissance of sorts since the tedious years of the 1990s. Over that interval, this subject was all but anathema, given the priorities and realities of those times.
Not any more.
While there can be little doubt that education is back in the limelight, this should not be construed to mean that there is anything approaching unanimity among chief underwriters as to whether it is…as our title implies…a priority, a luxury or simply a nuisance to which lip service must be paid.
This underwriter, having taken this matter to heart since becoming self-employed in 2003, firmly believes that there many across the global life and health industry who would endorse each of these three viewpoints in the context of providing education for their staff.
The intent of this essay is to objectively examine factors bearing on this issue, so that we may integrate our handling of education in context with the myriad other demands on our overflowing plates.
Education can neither be lavishly indulged nor simply ignored.
For better or worse, every chief underwriter needs to take a position and act in accord with that position in context with the corporate environment at hand.
Can an argument be made that education is important?
To address this, we need to make a distinction between initial education (to make an underwriter productive) and continuing education (to sustain and enhance his or her capabilities over time).
When one needs additional staff and cannot recruit trained underwriters from other companies, then the need for initial training is a given. Therefore we will limit this essay to the “optional” form of underwriter education: continuing education (CE).
We will also posit that it is absurd to argue that CE of any type, at any time is without merit, as there will be no disagreement among underwriting executives who have actually underwritten at least one case!
The issue, therefore, is whether CE is a priority, a luxury or a nuisance.
That which is both essential and accomplishable is a priority.
A priority not deemed affordable becomes a luxury.
A lesser priority jeopardizing (ostensibly) greater priorities becomes a nuisance.
Which term best describes the status of CE for underwriters in your company?
Let’s sift and winnow the arguments that continuing education is, in and of itself, a priority.
Argument 1: Underwriting & Profitability
It is said that the relatively recent and increasingly widespread appreciation of the role of mortality/morbidity gains to the insurer’s bottom line has been the driver moving many carriers to revisit the issue of CE.
Does the highest level of underwriter technical knowledge assure the best outcomes?
Not at all.
However, all other things being more or less equal, technical knowledge does indeed make an enormous difference. If you cannot recognize a bit of history or a test result for what it really means, your employer could pay dearly for forsaking CE.
Four decades of underwriting and/or teaching the subject impresses this underwriter with how seemingly small details can have enormous impacts.
A case comes to mind, presented to me at an ungodly late hour by my mentor Charlie Will, regarding a fellow with a recently-excised “thin” melanoma which had a sizeable area of regression underlying tumor according to the pathology report.
“Does this finding really matter, Hank?”
“It does, indeed, Charlie because it is a HUGE prognostic factor in this setting!”
An eleventh hour decision was changed.
And, as it came to pass, a big claim was avoided.
Yes, there is a linear correlation between continuing education and profitability!
Argument 2: Competitive Edge
We’re in a highly competitive industry.
Whether it happens to be a new product, a better system or an enhanced skill set, we’re always looking for an “edge” over other carriers.
No two cases are ever alike. Just one medical history detail, physical finding, or clinical test result can make the difference between a good risk we want to compete for, versus a bad one best avoided.
Therefore, the company whose underwriters are more knowledgeable will enjoy a major competitive advantage in two ways: making faster, better decisions on good business – and – “winning” fewer bad cases.
CE confers a competitive edge equal to a top-shelf new business system.
Argument 3: The Current State of Manual Guidelines
Last year, I undertook a small experiment.
Its results have never been published and this is the most I will ever say about them.
There had been a paper in a medical journal questioning how insurers handled dysplastic Barrett esophagus. Intrigued by the implications, I sent a list of a dozen scenarios of a similarly-significant nature to a handful of old-friend chief underwriters, asking them to look in their manuals and see if the information I referenced was covered.
The results weren’t pretty (if you get my meaning).
Almost none of the topics were given coverage in almost any of the manuals.
And some of them had been recognized clinically for a decade!
Companies put as many resources into maintaining and enhancing their manuals as time permits. Those who would normally do this detailed and time-consuming work have been sent to the “front lines” for production. As a direct result, manual updating is triaged, then re-triaged…and so on.
CE is not a manual surrogate.
This said, one could list example after example where information included in quality CE enhances what is in manuals, affording underwriters insights that can – and do, as we have seen time and again – result in better decisions.
Then, too, there is a teleunderwriting-specific matter of substantial magnitude which is often unrecognized.
This is the fact that teleinterview drilldown questioning gathers in a collection of bits of information which do not mesh well with most manuals.
Why?
Because manuals are written to clinical diagnoses and clinical diagnoses come mainly from medical records, not from drilling down layman!
CE, when strategically laid out to facilitate BEST, AVERAGE, WORST case triage based on elements routinely addressed in teleinterviews, confers an advantage that bridges the gap between interview content and manual content.
Whether the proposed insured had test A instead of test B, or takes medication C rather than medication D – these being some facts we get from teleinterviews – helps tell us if diagnosis E is most likely, as compared to potential diagnoses F or G. This is the whole purpose of drilldown questioning!
The sum of these drilldown-derived “nuggets” allows us to choose the most appropriate action in the manual…
…without resorting to acquiring medical records!
And the knowledge needed to understand how to best use drilldown information comes, first and foremost, from continuing education, which addresses the latest developments in diagnostic testing, pharmacology…and on and on.
Argument 4: Retaining & Recruiting Staff
There is a major direct writing carrier in the UK that has a spectacular CE program. Most (but not all, I am pleased to report!) of its elements are manufactured internally.
According to their chief underwriter, this program has conferred an unexpected advantage in terms of keeping their best underwriters at the firm, as well as recruiting trained underwriters from competitors (rather than having to hire untrained candidates off the street).
Underwriters will preferentially chose this company based on the emphasis placed on the underwriter’s continuing professional development.
The shrewd underwriter also makes an inference: “if they do this for CE, what other sensible things do they do as well?”
Being a baby-boomer and having no knowledge of current terminology in generational demography, I cannot tell you what they call my son and daughter’s generation, let alone the one that has followed theirs (and is now entering the work force).
Nevertheless, I do know…as any manager in any domain of business knows…that there are profound differences in the mindsets of each generation, and the two that have followed mine have certain expectations that we offspring of survivors of The Great Depression did not have.
Take telecommuting as an example.
Would telecommuting have been (assuming it had it been feasible back then) a panacea for baby boomers?
I seriously doubt it.
All we cared about was a secure, steady job!
Just the opposite, of course, is true about today’s 20- to 40-something underwriters, who value lifestyle as much their jobs (and as we have seen, in some cases, even more).
There is an expectation among newer-generation employees that employers will provide for continuing development in professional occupations like ours. CE is intrinsic to doing so.
CE is an employment perk.
It just has not as yet come up on the radar screens of many insurers from this novel perspective.
What Are the Sources of Pushback for CE?
If the need for sufficient high-quality CE is a given, then, in a perfect world, it would be a reality in every underwriting shop.
It isn’t
Not even close, we’d wager.
Why?
The forces which place CE in jeopardy are both overt and otherwise. Let’s examine them.
Source 1: The Budget
This is hardly a “news flash” that budgets are tight and subjected to micro-managerial scrutiny.
CFOs have made quite a reputation with their “shock and awe” attacks on the “low-hanging fruit.” Education, like business travel, has been the victim of this systematic process.
The problem, of course, is that the slash-and-burners have no idea what they are doing in terms of downstream impact on the company. Education is a good example of where this practice has been penny-wise but pound-foolish.
In my experience, chief underwriters are now enjoying success in garnering budgetary allotments for education, no doubt due to a number of factors including a growing appreciation of mortality-gain profits.
The “good money” says that a well thought out effort to secure monies for CE is possible in the vast majority of companies.
Source 2: Chief Underwriter Attitudes
Based on five years of self-employment in the domain of education, I would estimate that 35% of chief underwriters are aggressively pro-education, 50% favor it so long as it does not diminish productivity or get them “in trouble,” and the remaining 15% are ambivalent (or worse).
The “pro-education” folks are, for the most part, secure enough in their jobs to get the budget funds allocated.
But the majority, while not aggressively pro-education, do have great concern for the future of the company and those under their managerial umbrella. Their issue is usually either angst over broaching any budget issue which makes them potentially vulnerable to push-back or ambivalence to CE relative to other priorities.
No one can blame us for being gun-shy about making requests for funding these days. When we’re asked to do more and more while staff increases are treated as treasonous notions, the environment is not always conducive to advocating things like continuing education.
Another prevalent characteristic of the 50% is maintaining that there is “… plenty out there…” which one can access to serve in a CE role.
Anyone can make a quick list of these resources which are either free or virtually so. The problem comes when we try to pretend that they constitute a genuine alternative to legitimate continuing education.
One more issue needs to be raised in this context: a person who has never underwritten a case, but is given responsibility for managing underwriters. This is increasingly common and may be attributed to the flawed belief – at least where underwriting is concerned – that you don’t have to know how to do a job to manage those who do it.
The lack of a basic grounding in the science of underwriting as well as any notion of the art of our profession leaves one ill-suited to apprehend the importance of education (not to mention many other things).
And what compounds this problem is that these individuals are often on a “fast track,” which disposes some of them to not ruffling feathers (e.g., pushing for CE funding) while spending most of their time in meetings or
sniffing out “photo ops.”
Mind you, I have known many outstanding individuals who have come through and then gone beyond underwriting management, performing magnificently. I’m half tempted to name a few but don’t dare embarrass old friends!
Still, there have been many – especially those with unbridled ambition for an office on the “top floor” – who have done more harm than good while managing underwriters simply because they did not understand what we do.
Source 3: Production
Today’s buzzword is PRODUCTION.
All matters are subordinated to grinding out cases faster and cheaper… but not always better (if in fact even half as well as when we weren’t “on a clock!”).
What needs to be appreciated in some quarters is that as you grind out more and more cases without appropriating any time for continuing education, you inevitably cause an adverse impact on the bottom line.
A worrisome reality these days is that some “C” folks, “fitted” with precious-metal parachutes, are willing to “buy” downstream excess mortality and morbidity for the immediate gratification inherent in new premium!
In my view, chief underwriters have an obligation to join hands with actuarial, claims and medical officer peers in sending a clear warning when this gets out of hand. No doubt reinsurers will be only too happy to help!
Source 4: Turf Protection
Very often, CE is not manufactured internally to the extent needed to meet the needs of underwriters. When this happens and conscientious underwriting executives try to deal with it, a curious phenomenon sometimes emerges.
Which I call a “turf protection syndrome,” defined by this statement: “we do things the XXX life way here”
Consider the fundamental disconnect between the statement “we do things the XXX life way here” and the fact that CE is not about changing underwriting philosophies or practices.
CE is about making new information available to enlarge underwriters’ understanding of facts. Facts are not philosophies or practices. They can be used to enhance philosophies and practices…but that is a separate issue from their intrinsic nature.
The reality is that this odious pushback against CE is just “snake oil,” a transparent and easily debunked argument fashioned solely for “turf protection” purposes.
What Are Our Options?
Option 1: Manufacturing Education In-House
Once upon a time, this was a “no-brainer.”
In the last decade, however, it has become largely a fantasy…with some notable exceptions I’d love to be able to acknowledge and showcase here.
A few insurers have created adequate, sometimes even downright lavish, in-house continuing education.
Rare as they are, they should be profiled in depth for the rest of the industry!
What are the obstacles to doing what they have done?
- You must have the high caliber talent…folks who are committed to staying current in their fields, willing to invest the time and energy needed to put together worthwhile CE and blessed with the talent to get the job done.
- You must be able to free up this talent from the rigors of daily production such that they can invest the time needed to produce these high quality educational assets. This is a knotty problem because you have to justify paying their salaries to do this while also replacing their services on the “front lines”!
- You must make a commitment to providing funding for the resources these individuals need. This can be deceptively expensive. Unless one subscribes to a journal for anywhere from $150 to $500+/year, one pays dearly to access papers published in that journal which are needed to get the job done. We invested over $30,000 in our medical library, fork out $15,000 for journals annually and cough up an average of $25 per article for over 500 additional papers needed each year to get high CE manufactured.
In consideration of the foregoing, it is understandable that 95% of life companies – and probably a higher % of health carriers – do not have the capacity to create in-house what they need to accommodate the CE needs of underwriters.
Option 2: Educational Resources From Reinsurers & Service Providers
Having spent a glorious year at Lincoln National Re, I can tell you younger folks a great deal about what abundant, outstanding educational services from reinsurers (usually free or nearly so) were like back then.
What was possible then, however, is impossible now.
Not that reinsurers don’t provide excellent offerings. They do to the fullest extent their budgets and staffing allows. And what they do is virtually always of the highest quality.
Still, the occasional seminar or quarterly newsletter just doesn’t get the job done.
Today’s razor-thin pricing, high operating costs and obligatory refocusing of talented assets on production make what Lincoln Re once could afford to do a fond memory.
Service providers, on the other hand, are a bit less prolific than reinsurers in what they offer up for clients.
In recent years, some have toned down heavy marketing in favor of more scientific content in their publications. Some do educational events and most of those are well-focused on scientific content. And a growing number graciously support independent initiatives like my publications and the ongoing series of underwriting surveys.
On balance, an argument could be fashioned for some service companies doing a tad more in this regard.
But this begs the question…
…which is: is it feasible for insurers to depend upon reinsurers and service providers (other than those whose specialty is education) to make up for what they cannot accomplish in-house?
Of course not.
Option 3: What Else Is Out There?
As a profession, we have not done enough to create a literature which meets our needs.
How many excellent presentations at meetings reach only a tiny fraction of their potential audience, never to be made available more widely in published form because presenters have little free time or, in some cases, perceived incentive to get the job done?
Industry meetings and seminars usually provide at least some excellent content. On the Risk and the Journal of Insurance Medicine are stellar resources, with consistent worthy content. Underwriters who read both will advance their knowledge.
But they are not – nor are they meant to be – the extensively-researched, sharply-focused and professionally designed content which define what CE must be.
In North America and some other parts of the world (most notably Asia) the FALU designation symbolizes attainment of professional stature. This program ranks as the finest achievement of the North American underwriting profession in its history. I am an FLMI, CLU and FALU (with distinction).
Ask me which of these designations means by far the most to me!
The textbooks of the FALU program have been superbly prepared and lovingly maintained by a devoted team of professionals. The years I spend on the Life Underwriting Education Committee are etched into my memory as among the most joyous of my career. Many of my dearest friendships were made through that avenue of industry service and I commend service on this committee to all eligible participants!
All of this said, the ALU textbooks are not continuing education. It is inherent in their nature that they cannot serve adequately in this capacity…this from a person who likely has written more ALU 3 chapters than anyone in history.
Studying ALU while matriculating through the program creates a baseline of knowledge, upon which real CE builds to assure that the participant is genuinely “cutting edge.”
There are many additional sources out there, including free and low-cost e-newsletters, webinars and the Internet (which, while bountiful, is terminally compromised because so much effort is needed to ferret out what is underwriting-salient, from the rest).
If we put our minds to it, we can scrounge up a heterogony of educational bits and pieces, create a patchwork quilt and then argue that this is an “adequate substitute” for genuine CE.
Fact is, some chief underwriters do precisely this, passing it off as “meeting the needs of our underwriters.”
There is, of course, a fourth option.
But in consideration of the fact that Hank George Inc. is – to our knowledge – the sole independent provider of CE, I will abstain from comment on the option of acquiring CE from specialized providers, inviting you to our web site www.hankgeorgeinc.com for this purpose!
Concluding Comments
Hopefully, this essay has made an effective case for the following:
- Education is essential and we have a window of opportunity right now to make it happen.
- You get what you go after in life. For the sake of the underwriters’ professional development and the company’s bottom line, this is not a time to be timid about asserting the need for budgetary funds for education.
- Anything less than an honest assessment of the pros and cons of our options where continuing education is concerned does a disservice to all. If we choose discerningly among our options, we can realize the goal.
- There are companies that have manufactured entire programs in-house; there are even more who have fashioned equally fine programs by using a variety of internal and external assets.
- However you achieve CE, it must be there so that you are ready for the challenges you will continue to face as a major profit center for your company.
