With today’s real focus on compliance, regulation and control, would you expect to see employees’ authority to make underwriting and claims decisions clearly linked to their skill, competence and experience? We hope so – or are you feeling uncomfortable?
This was one of the areas we wanted to explore in a recent research study that sought to gain a ‘temperature check’ of the organisational capability that currently exists across the insurance market to drive the development of technical excellence. (For a copy of the full survey report – “The organisational capability in the insurance market to drive the development of technical excellence” – please send an email to email@example.com).
This short article explores the responses to two statements, firstly:
‘The business clearly links levels of technical authority (in underwriting, pricing, claims, reinsurance, etc.) to the skill and competence of the individual authority holder.’
The responses were of particular interest to us, as in our view, ensuring authority levels are earned through demonstrable knowledge and expertise rather than through tenure or position in a company, is crucial to ensure the integrity of the business being written and the claims being paid.
So although this question had one of the overall highest ratings in our survey, the fact that nearly a third of respondents felt their business could do more in this area and a further one in six felt their company only did this to a degree, should be a cause for concern. This could lead to:
- Business being bound and priced that isn’t fully understood leading to significant underwriting leakage
- Claims being reserved /settled at levels higher than they should be leading to significant claims leakage
Given the potential financial consequences, not to mention reputational issues if regulators were to find against an organisation for failing to have sufficient controls in place, we see this as a priority area for senior claims and underwriting directors, Insurance Risk teams and the HR and/or technical development teams with a responsibility for providing capability development programmes.
Putting in place a framework that has a defined set of knowledge and skill levels for each level of authority, and allows initial and subsequent assessment of authority holders against these competencies, is not an easy task that can be done overnight, but one which we feel is crucial.
Getting a view on how well the industry collects and analyses data on technical capability levels leads us to the second statement from our recent survey, namely:
‘There is a system in place that enables the collection and analysis of technical capability levels that is used to prioritise and shape development and training activity.’
Less than half of respondents felt their business had in place a system that collected and analysed technical capability levels that was then used to drive training activity.
This response pattern may be because there is no actual system in place, or because there is a system in place, but it isn’t used to shape training and development activities – without a definitive follow up question to respondents, we can only speculate for those organisations where we haven’t been engaged. However, based upon our experience of engaging with many across the industry, we would suggest it is because there is no system in place – as organisations that have a system, invariably use it to manage and develop capability levels.
This highlights a definite area for improvement for the industry. If gaps in capability are not known, how do management address them through training activity or other means? Also, if gaps in technical capability are not known and training priorities are not driven by highest needs, then destruction in the value of any training investment is inevitable.
In our view authority levels must be earned and linked to competence to ensure the financial and reputational well-being of the company. To support this, a business needs to have a framework in place that allows it to collect and analyse the competency levels of those with technical authority. The outputs from this analysis, should be used to prioritise and shape development solutions.
Our research has shown that although there is a lot of good practice in the industry, there is definitely room for improvement in these areas.
At MAPtraining, we have considerable experience concerning the development of technical competence in insurance – from the initial development of authority frameworks; the development of skills and competency frameworks to sit alongside the authority frameworks; building assessment approaches to enable a robust and objective assessment of technical competence; to the design and delivery of training and development programmes to help address competency gaps.
If you believe you need any help in any of these areas, or would like to discuss any of the areas raised in more detail, then please do get in touch.