Any broker with delegated authority will be familiar with the importance of a Broker Underwriting Guide, and how at times, it can be a bit confusing!
At Ecclesiastical the Broker Underwriting Guide is affectionately known as the ‘BUG’. Amanda Hone, Head of Schemes Underwriting at Ecclesiastical explains how to take the sting out of the BUG.
Have you ever been preparing for an audit only to spot that the BUG doesn’t reflect all the changes that you’ve discussed and agreed with your insurer? Whether you’re a broker or an insurer, it’s an ever-evolving document reflecting what you’ve learned from each other about the scheme from referrals. It’s hard to keep up to date and on top of the changes. There’s an ocean of text with just a contents list and word search to navigate. It sometimes tries to be both granular and broad at the same time. Where’s the line between authority and breach of contract? Surely it doesn’t have to be this hard!
Our schemes team thinks not and understands the frustrations of having to read page after page to get to what you need. It can be confusing when there are multiple updates or when an update on a topic isn’t reflected in all relevant sections. It’s hard for brokers to stay up to date, and all too easy to suffer an unintentional breach of authority.
The Ecclesiastical view is the BUG needs to be fit for purpose and should provide clear guidance that both parties are comfortable with, and it should be up to date. Challenges also come when the two parties aren’t aligned. As an insurer, if you have confidence in the underwriter you’ve delegated to, then you should be confident in how the BUG is applied. That confidence should extend in the opposite direction too. An audit is then a two-way process whereby both parties can evidence accurate application or call-out contradiction and areas that require clarification.
Fair value assessments regulation is particularly challenging but necessary. Every product needs an annual assessment, which requires mutual understanding of the customer need and detailed understanding of multiple factors such as complaints, distribution and claims, all of which are unique to the scheme. Another gripe is having to wait on insurers to approve referrals, which is no good if you’re selling on speed of service. These bottlenecks often arise because brokers are unsure about their authority. Our 2023 study* found 89% of provincial brokers and 94% of super-regional brokers rate compliance support from their current provider ‘not excellent’.
It’s all about striking a balance. There can be a tendency to focus on rules without offering the necessary guidance. To put the BUG out and leave the broker to grapple with the complexity is unfair. Conversely, being too woolly can lead to misinterpretation and a rise in referrals or underwriting breaches. Specialist schemes brokers might have just one insurer agency and that’s with their scheme carrier, so they depend on them for steer. As an insurer you’re unlikely to get the BUG right first time as it will be influenced by both parties input, therefore could contain contradictions, and it will evolve. You do need a level of ‘rule’ but with a balance of fluidity to reflect the expertise the scheme broker has in the sector.
Our schemes team have an altogether different starting point: a mutually beneficial relationship in which insurer and broker take on the underwriting role together. It’s a two-way exchange of knowledge and expertise. If you’re one of our brokers we consider you part of our underwriting team. We’ll support you, train you and engage as if you’re in our office underwriting on our behalf – because that’s essentially what you’re doing. We may not always have the answers, but we’ve most likely come across the issue before and so we work with our brokers to achieve a mutual level of comfort.
Underwriting auditing is essential for quality assurance, but it doesn’t have to be an onerous tick-box exercise. By working collaboratively, you improve quality, and just by talking and keeping in touch you remove much of the confusion and inefficiency that leads to frustration.
We’re able to build closer relationships because we have the expertise our brokers need in-house, with no need to outsource. We’ve been doing this for 40 years, so we understand the fine balance between guidance and authority. As technical compliance becomes more complex and volatile, these relationships will count more than ever.
*Ecclesiastical Insurance Schemes Study 2023
Amanda heads up the underwriting teams within our delegated authority schemes business This includes new schemes, technical underwriting, operational, portfolio optimisation and product and proposition. She has enjoyed over 30 years of her career at Ecclesiastical Insurance in various underwriting roles across the organisation.
Outside of business, she enjoys going on long walks with her dogs and spending quality time with her granddaughter.