Broker vs Underwriter

Insurance Broker Versus UnderwriterInsurance broker or insurance underwriter is a question you’re going to have to ask yourself before starting out in the insurance industry. When you don’t know much about a role, it’s difficult to know if you’ll enjoy it or if you’ll be any good at it, so I’ve put together a list of characteristics for the two main roles in insurance that might make the decision that little bit easier.

The Broker
An insurance broker is generally the socially savvy type who can make a stranger feel like you’re their best friend and find business opportunities wherever they turn. To be a great broker, you will need to be:

  • Incredibly outgoing – Being a broker is a very social job; you look after your clients needs as well as build relationships with your underwriters to obtain great cover at competitive prices for your clients. You also need to be able to pick up the phone to anyone and make conversation, so if you’re the type of person who chats to the guy next to them on the plane, or can hold a conversation with someone without them saying anything, you’re going to be good at being an insurance broker.
  • A great negotiator – As a broker, you will be buying insurance on your clients’ behalf, and to keep them as a client you are going to have to find them the best cover at the best price, which means negotiation. You will have many different underwriters competing for your business and it is your job to provide the best cover to your client for the best price and to place your business with a company that has a great brand. So if you can get discounts at Tesco, or manages to haggle a free Big Mac with your Happy Meal, broking is for you.
  • Super competitive – The broking market has a variety of players, some of which will be competing in your space. Large companies will want to ensure they have the best broker representing them and the competition for this place will be rife. You’ll be pitching to clients as to why you should represent them, and will be wining business from your competition. If you can do this and get ahead of your competition and across the finish line in first position, you’ll be falling over promotions.
  • Resilient – Other brokers will attack your book of clients ferociously, and you need to be resilient enough to keep fighting them back every time they try to win business from one of your clients.

If you have these four character traits, being an insurance broker will be as natural as walking. Now all you have to do is get yourself a pair of braces and wear red socks on Fridays.

The Underwriter
An underwriter is often the numeric type who can think about the big picture just as easily as they can consider the detail. You will run your own portfolio of risks and be held accountable for it’s performance. To be a good underwriter you need to be:

  • A decision maker – As an insurance underwriter, you will build a book of business around your specialist area. You must know which risks are good risks, which risks are poor risks and how to price and risk manage both. If you underwrite a risk that costs you $10 million and wipes out your book’s profits for the year, you have to stand by your decision and justify your decision to management. If you are a natural leader and decision making comes easily to you, then you would make a good underwriter.
  • Logical – When considering if you want to insure a particular risk, you need to logically think where the claims could come from. You need to consider the type and amount of cover you are willing to provide and ensure you are not liable for any risks you are not prepared to take on. Being obscenely organised and task focused will stand you in good stead as an underwriter.
  • Analytical – There is a lot of information to process when you are considering underwriting a piece of business and many of the factors you look at will have pricing implications. You will need to build a price up from scratch, considering the information you have and be able to justify it if challenged. An underwriter will also have to consider how each risk will impact their overall book of business; it is important to diversify your book to protect your bottom line and ensure you are not over exposed in a certain area. Having a mathematical background and being confident with numbers is essential to becoming a good underwriter. Understanding how you get to your price and understanding how a particular risk will affect your overall book of business will be vital to your success.
  • Comfortable being your own boss – All the way up to chief underwriting officer, you will work within certain boundaries in terms of the type of risks you are authorised to write and how much cover you are able to provide. However, within these boundaries you will be able to underwrite your own risks and be accountable for your own book. Your team will be around you for advice and support, but you should be aware of your own book’s performance and you will be held accountable for your own P&L.
  • A marketer – A large part of being an underwriter is going out and building your book of business, through engaging brokers and building lasting relationships. You need to be incredibly social and engaging, and not afraid of putting yourself out there. If you are able to introduce yourself to anyone and hold their attention, it will be a great asset as a underwriter.

The art of underwriting takes time to learn and years to perfect, however if you have these characteristics, you’ll take underwriting in your stride.

Everyone has an opinion on the broker vs underwriter battle; some stick with one their entire career, others hop between. If you’ve got a clear cut view on what makes a good insurance underwriter or what makes a good insurance broker, or even if you just want to offer fashion tips aside from the red socks / braces combo, pop it down below.

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