Remote Underwriting: Today and Tomorrow
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.
For the purposes of this essay, we define "remote underwriters" as those who work from home every day, as opposed to working at home some but not all days.
In the 2013 New Business Management Survey, 50.5% of 109 respondents said they had one or more underwriters working from home on a daily basis.
The prevalence is far higher among large insurers. Among the 23 largest firms participating in the survey, 78% now have at least some remote underwriters.
In this essay, we will look at why this evolved as well as what its implications are now and for the future.
Why do many insurers like this arrangement?
This is a perennial topic of discussion at my study groups.
Members generally cite two perceived advantages:
- Substantial fixed costs savings in terms of office space, etc., over the longer haul.
- Higher productivity – and we will discuss this pivotal issue shortly.
What's in it for underwriters?
This is a more subjective question because perceptions differ markedly between individual underwriters.
- Considerable savings on spending for clothing, commuting, etc.
- Ostensibly, greater freedom to manage their lives – and we will also get into the realities of this matter further on.
- Potentially greater compensation
I know a number of underwriters that have left an office-based position to work from home and realized a significant hike in their salary in the process.
This is mediated in part by the cost of living in the city where the insurer is based, which could impact their compensation package. For example, if you live in a small midwestern city and join a large carrier in, say, Boston or New York, you stand to gain income in the process.
Are underwriters more eager to work from home now than they were 5 years ago?
Based on our survey, 80% of companies believe they are.
This suggests that word has gotten out via networking at meetings and amongst underwriters working for the same firm that the "pros" significantly outweigh the "cons."
It would be instructive to survey a cross-section of production underwriters on this question. To our knowledge, no one has done so to date.
Are remote underwriters actually more productive than their peers working in the home office?
Some years ago, when a far smaller share of companies offered this option, those in our study groups that did so were unanimous on this point: YES!
I recall chief underwriters citing anywhere from 10% to 25% greater case output from their remote underwriters, as compared to peers working in the home office.
More recently, the feeling is that this has leveled off. In fact, some carriers say there is little if any appreciable difference…although the consensus seems to be that remote underwriters are still marginally more productive.
In the survey, respondents were split pretty much 50:50 (both all survey responders and well as those from the largest carriers) when asked if remote underwriters were "significantly" more productive. This is consistent with the recent perceptions of our study group members.
One chief underwriter ventured to say that his in-office underwriters noticed the greater output of peers working from home and started putting out more work…lest they jeopardize their chances for raises and bonuses.
Another factor leveling this playing field is that insurers are less disposed to permitting remote underwriters to do a substantial share of their work at off hours, when distractions are minimal. This is because they want these underwriters accessible to the field force (advisors) and home office staff during normal business hours (when distractions from calls and other factors are apt to adversely impact productivity).
How long does it take a new underwriter to be sufficiently skilled to work from home?
In the survey, over 70% said at least 3 years.
On the other hand, when asked elsewhere in the survey how long it takes new underwriters to be fully productive, over 90% cited 2 years or less.
Is this a significant contradiction…or are there issues other than being "fully productive" that come into play?
In my opinion, there should be no hard and fast rule here.
Some people approach their work in a more organized and professional manner, independent of their tenure. Some are far less dependent than others upon peers and staff personnel (medical directors, etc.) for assistance on cases.
For these and other reasons, it makes sense that some portion of new underwriters should be able to work from home successfully in less than 2 years…whereas others may never be good candidates for this option.
Are insurers keeping a closer eye on their remote underwriters?
Yes, and no doubt the driver here is not paranoia but rather the focus on productivity metrics.
Half of survey respondents admit using monitoring technology to make certain remote underwriters are "on the job" at designated times.
A smaller share also listen in on remote underwriters' phone calls with producers (advisors) as a putative quality control practice.
Do they do the same for underwriters based on the home office?
Frankly, you may know better than I, as this subject has never come up in our study groups.
Does working from home complicate continuing education?
Most insurers with remote underwriters bring these underwriters into the home office periodically for intervals of one to several weeks. Part of this is no doubt allocated to various forms of training, including continuing education.
Webinars have been an effective way of involving remote underwriters in education.
Some progressive insurers have tackled the problem of ongoing education for remote underwriters by enrolling in our Continuing Education (CE) Program. It consists of self-study courses with online exams whose results can be readily monitored by the chief underwriter.
For more information about our CE program, please visit
Can insurers effectively involve remote underwriters in projects and other activities typically limited to people working in the home office?
With today's technology, there is no reason remote underwriters cannot be substantially involved in these kinds of things.
Over 60% of all survey respondents…and 88% of large companies…agree with this assessment.
Do remote underwriters put themselves at a disadvantage in terms of promotion?
We need to make a distinction here between: 1) promotion to higher levels of technical status, 2) managing subsets of underwriters and 3) being the chief underwriter.
Moving up the technical ladder should not be an issue.
We know a few companies where remote managers oversee teams of other remote underwriters, so the second role is quite feasible.
Probably (almost) never…
We say "almost" because we were approached to assist a company looking for a new chief and they would countenance someone working remotely.
However, this "chief" position was the top of the technical ladder and did not include managerial accountability for case underwriters. Hence, this makes sense, whereas a true "chief" to whom all of new business (and sometime more) reports is unlikely to be working remotely any time soon.
Bottom line: if you want to become chief underwriter in your company, you probably have to work in the home office; sooner rather than later if you happen to work remotely now. And if your ambitions run in this direction, it would be to your disadvantage to opt to work entirely from home.
Is the % of underwriters working from home likely to increase?
Well over 85% of survey respondents said "yes."
It is too much of a "win-win" for anything else to be true.
We think there will soon be companies (indeed, perhaps there already are) where all underwriters work from home.
The only potential fly in this ointment is whether granting this perceived privilege to all underwriters might stoke up resentment on the part of employees working in other potentially-remote jobs (at least by their reckoning) that are denied the same opportunity.
This has already become a hot potato at one company…where the chief underwriter had to back off from making "work from home" a condition of being an underwriter.
What are the implications here for companies that do not permit their underwriter(s) to work from home?
Not good, assuming you define "implications" as being able to retain your best underwriters.
75% of all survey respondents agree with me on this.
More importantly, 100% of the big carriers also do.
This problem is magnified for companies situated in middle-to-lower cost of living areas.
They not only face losing underwriters if they prohibit them from working at home but also because there can be – as said earlier – a rosier compensation arrangement if the underwriters get hired by certain firms.
On the other hand, I know underwriters who say they would never voluntarily work from home every day because they would miss the benefits conferred by working with their mates.
In fact, I know two underwriters who opted back to the home office for just this reason. However, they were working remotely full time within the same greater metropolitan area as the home office rather than residing a thousand miles away.
As "quality of life" issues play a bigger role in how people view their jobs – and this is inevitable given trends in the younger generations – the allure of working from home is likely to increase.
Therefore, it is probably a wise call for insurers to look into the prospects of accommodating working from home if they still do not offer this option.
Have chief underwriters ever left their management positions in favor of working from home as production underwriters?
I know one person who did this and there may be more in the future.
Given the pressures brought to bear on chief underwriters and the attractive levels of compensation that can be realized by the most capable remote underwriters, one can appreciate why some chiefs, especially late in their careers, might choose to walk away from all the grief and simply work from home.
Do insurers consider their remote underwriting programs to be successes?
Roughly 95% of all survey respondents – and the same share of big companies – concur that, yes, this was a shrewd decision.
Given this overwhelming endorsement, insurers not currently offering this arrangement now have added incentive to probe the merits of creating a similar program for their staff.
What is the next step in the evolution of this process?
I think we will see more underwriters become entrepreneurs, incorporating themselves and then selling their services as contract underwriters to one or many insurers.
The biggest obstacle to doing this for Americans is health insurance costs. Canadians, on the other hand, do not have this dilemma hanging over the heads.
We believe a national single payer healthcare system is inevitable in the US. When it comes to pass, it could jump start interest in selling one's services as a case-underwriting contractor to the highest bidder.
At this writing, 13% of insurers used contract underwriters on an ongoing basis and 30% more do so at intervals during the course of the business year.
We project considerable growth in outsourced underwriting as insurers pull out all the stops in their obsession with cost control.
The "bad news" about being self-employed is the innate fear of not making enough money. Balanced against this is a truly independent lifestyle beyond what is possible in a company-controlled remote underwriting environment.
Those who maintain that the need for skilled home office underwriters is going to steeply decline don't know what they're talking about!
Underwriters will continue to have a vital role in life and morbidity risk management simply because NO TWO CASES ARE EVER IDENTICAL. Hence, there is always a need for human judgment, especially on more complex cases with multiple risk-related issues.
Underwriting engines may someday live up to all the hype…but this only takes away the cases that under-utilize the talent of real underwriters.
Working from home – for a carrier, outsourcing firm or on a self-employed basis – is the future for our profession.
Just as it will be for more and more actuaries, medical directors, claim examiners and others involved in mortality and morbidity risk management.
Count on it.
I welcome your comments and with your permission I may cite them here or in Hot Notes. I can be reached at firstname.lastname@example.org or 414-423-0967.