Underwriting: Why Different Underwriters Quote Differently

When it comes to insurance quotes, few things are more frustrating for clients—let alone independent agents—than the inconsistencies in premiums quoted on the same or similar properties. Imagine a client with multiple properties: one location is quoted by one underwriter, and a nearly identical location gets an entirely different rate from another. The inconsistency can seem random, even unfair. This leaves agents in a tough spot.

We at Captive Coalition have seen this frustration firsthand when working with independent agents who have dealt with this frustration, clarifying the reasons behind these variations, explaining the roles of “production” and “process” underwriters, and providing advice to help agents manage these differences with clients. 

By the end of this article, you’ll better understand why underwriting inconsistencies happen and practical steps to manage client expectations effectively. 

Reasons for Underwriting Inconsistencies

Insurance pricing can seem straightforward, but the reality is far from it. Different underwriters can look at the same account and come up with drastically different quotes. Why? Here are some reasons:

• Underwriter Judgment: Each underwriter applies their expertise and judgment to assess risk; some may be more risk-tolerant than others. This is why one underwriter might price an account more aggressively than another.

• Carrier Strategies: Some carriers are experimenting with more automated “process underwriting,” which can prioritize speed and volume over a nuanced understanding of risk. In contrast, larger accounts will likely receive more individualized attention. 
  
  
• Volume Pressure: Insurers are constantly trying to balance growth with cost savings, which can lead to pricing strategies that aren’t always consistent or transparent. 

Underwriter Experience and the “Art of the Desk”

A phrase used by one carrier to explain these differences is “the art of the desk,”—but what does that mean?

They’re trying to explain an inconsistency that doesn’t make sense by saying the underwriter made a judgment call.

Experienced underwriters, especially the ones handling more complex or high-value accounts, often approach their work as an art form. They’re able to blend strict guidelines with creative solutions. 

Unfortunately, not all underwriters operate this way. Less experienced or more risk-averse underwriters may quote conservatively to avoid potential losses. A more creative underwriter actively seeks ways to make a policy that meets both the client’s needs and risk requirements.

For agents, it’s important to know who you’re working with. An experienced underwriter can be a valuable partner who’s willing to find a way to get a client’s risk covered at a competitive rate. On the other hand, a “process” (or less experienced) underwriter may prioritize efficiency and quick decision-making, especially if they have discomfort or unfamiliarity with a particular risk, potentially offering less flexibility.

The Difference Between Production Underwriters and Process Underwriters

There is also a difference between production underwriters and process underwriters:

• Production Underwriters work closely with agents and clients, often bringing a personalized, problem-solving approach. They’re usually invested in finding a way to make deals happen. These underwriters frequently work “in partnership” with agents and want to find solutions that balance risk and competitiveness.

• Process writers operate on a more automated, volume-driven basis. This role has become more common as companies try to reduce expenses and increase efficiency, often at the expense of a deeper client relationship. 

Practical Advice for Agents Addressing Underwriting Inconsistencies

Agents often feel caught in the middle when facing discrepancies in quotes or terms. Clients understandably want consistency. Unfortunately, the realities of underwriting make that hard to guarantee. Many traditional carriers rely on process underwriters with more strict parameters and automated systems that don’t allow for the same flexibility as experienced production underwriters.

For agents, this is important when explaining the “why” behind unexpected differences in quotes. Here are some approaches for these conversations:

• Clarify the Process: Educate clients on the differences between production and underwriting. Explain that while some underwriters take a highly individualized approach, others may work within more rigid frameworks, which can impact rates and terms. 

• Advocate for Expertise: When possible, request that a specific underwriter with the right expertise handle the account, especially for more complex or high-value risks. Clients often appreciate knowing the agent is working to ensure they receive a well-considered quote.

• Emphasize Preparedness: Underwriters, especially risk-averse ones, value detailed, complete information about a client’s risk profile. By proactively providing full loss histories, risk management practices, and other relevant data, agents can give underwriters confidence to quote more competitively. 

• Manage Expectations with Transparency: Set expectations with your clients and let them know that every effort is made to secure the best possible terms. Underwriting is a mix of science and judgment, after all. Help your client feel reassured when faced with variations. 

How Independent Agents Can Address Client Questions and Concerns

When a client sees two different quotes for similar risks, explaining the reasons can be tricky and feel like an uphill battle. Here are some ways agents can handle these conversations effectively:

• Be Transparent and Acknowledge the Disparities: Start by acknowledging these differences can be confusing, and assure your client that you’re working to provide clarity. 

• Explain the “Art of the Desk”: You don’t need to address the “art of the desk” directly. It’s more about using simple language to explain that underwriting involves both data and judgment. Help your clients understand that not all underwriters make decisions the same way and that factors like experience and risk tolerance play a role. 

• Focus on Relationship-Building: Be sure you’re still finding the best possible solution. You can explain how your relationships with carriers and underwriters can allow you to advocate and secure favorable terms on their behalf.

Learn About Underwriting for Captive Insurers

In the world of insurance, underwriting inconsistencies can be challenging. Understanding the nuances of the process can give you more opportunities to make quotes and coverage optimal for your best clients. Experienced “production” underwriters bring creativity to risk assessment, resulting in more customized quotes. Conversely, “process” underwriters provide efficiency and standardization but may lack the same level of client focus.

Sometimes, traditional insurance might not cut it for your clients, especially with inconsistent underwriting and higher pricing on renewals. Read our article on the differences between traditional and captive insurance policies. Captive insurers could be a better alternative for your best clients. You can also read about the captive underwriting process.

You might be wondering if your best clients are a good fit for captive insurers. Use this captive assessment tool to get your results.