I realize it is a bit out of character for me to write about new business management, given that my work has been virtually 100% in medical underwriting (and the mere notion of being a supervisor of anyone makes me break out in hives!).
After managing two underwriting study groups for over 15 years and traveling nearly 3 million miles speaking and visiting with chief underwriters on five continents, it is apparent to me that there are some "big picture" issues here worthy of reflection.
The thrust of this essay is the structure of reporting relationships within the new business/underwriting domain.
The 4 players on this chessboard, if you will, are:
CUO – chief underwriting officer
NBS – new business supervisor, to whom underwriters and new business support staff report for administrative purposes
CMO – chief medical officer
Boss – the person to whom the CUO, CMO and NBS report
There are 4 basic new business models based on reported relationship, as characterized in figures 1-4.
I personally know highly competent CUOs who will disagree vociferously with my analysis of these four structures.
I also know that in at least some cases their disagreement is fueled by striving to be (or at least appear to be) a "good corporate soldier" rather than admitting that they do indeed see the structure they are caught up in as undesirable.
"Desirable" in this context means a structure where the CUOs can get their job done most efficiently, with as little stifling from corporate politics as possible.
In this model, line and staff both report to the chief underwriter. This means the CUO has control over the full span of new business activities.
"Line" is represented by the new business supervisor (NBS).
This person has administrative management accountabilities for the production underwriters and all new business support personnel. Typically, the primary focus of the NBS is assuring that productivity levels are maintained.
"Staff" is presented by the chief medical officer (CMO).
It includes all medical directors and, in larger companies, other staff personal such as actuaries assigned directly to new business, etc.
Staff personnel are vested in maintaining high quality underwriting through a variety of means including case consultations with line underwriters, setting underwriting standards and so on.
In this configuration, the CUO is ultimately responsible for overseeing the balance between productivity and quality.
While there are always political issues in corporate life, this model gives the CUO sufficient span of control to minimize their adverse effects on getting their job done.
This model is functionally adequate but less desirable because the CMO reports directly to the same boss as the CUO.
For this reason, the CUO is at risk for being involved in turf wars and other distractions that would be minimized if the CMO reported directly to the CUO.
This model would be even less desirable if the CMO reported to a different boss than the CUO because it would ratchet up the impact of political issues and further erode the ability of the CUO to manage both productivity and quality.
This model is dysfunctional.
The new underwriting supervisor—now likely with a title equivalent in stature to the CUO— reports to the same person as the CUO.
If the boss is a prototypical "bean counter" with little or no understanding of underwriting (as more and more are these days), the NBS will gain the upper hand.
This is because the NBS is the driver of maximizing productivity while the CUO is largely concerned with underwriting standards and other factors directed at quality issues.
The adversity of this model can be partially mitigated if the NBS has a strong underwriting background.
Sadly, it is not unusual any longer for the NBS to have little or new underwriting acumen…and we have seen this culminate all too often in festering line underwriter frustrations and the best underwriters ultimately fleeing the coop for greener pastures.
This model will lead to frequent collisions between the CUO and NBS.
Unless the boss knows what underwriting is all about (i.e., assuring favorable mortality outcomes) and expects to remain in their present position long enough for adverse mortality to affect their career, the CUO will be stymied at every turn.
This is the quintessential dysfunctional model.
Each of the three main executives in the greater new business domain reports to different bosses. Thus, each becomes a pawn in the political chess games of their bosses.
And if these bosses are undifferentiated senior executives, often coming into the industry with little or no knowledge of its intricacies and with their eyes on bigger things, efficient use of line and staff personnel to carry off new business operations will be encumbered.
In every company where I've seen this model embraced, the political atmosphere has been oppressive. Thus, the CUO goes home every night wrung out from frustrated encounters and incessant squabbling, knowing that things can and should be done differently but unable to affect necessary change … because such change collides with the perceived interests of the NBS, CMO and their respective bosses.
The only new business management model that makes a lick of sense to me is Model 1.
Assuming you have a quality CUO—defined here as an individual with sufficient underwriting know how and not an individual treading water in anticipation of retirement—this model favors maximum success and an appropriate balance between meeting realistic productivity standards while maintaining favorable mortality.
If you disagree with this characterization of functional vs. dysfunctional new business reporting relationships, I'd love to hear from you.
On the other hand, if you concur with every word written here, you must surely be that (better-looking) twin my mother never told me I have!
Over the last decade, given the advent of sufficient technology, a few American insurers began experimenting with the concept of underwriters working from home.
In the intervening years, the prevalence of what we call "remote" or "telecommuting" underwriters has increased dramatically.