The disadvantages of relying only on hands-on experience to train D&O underwriters.

D&O underwriters generally endure a similar learning path. When they start their careers, they receive a rather general and quick explanation of the basics of D&O exposure and underwriting analysis, and pretty soon, they are asked to handle actual deals—hopefully easy ones, though that is not always the case. It is then assumed that all D&O underwriters need to do the job is hands-on underwriting experience and that proper formal training is not necessary. This is wrong!

Experience is indeed vital to becoming a successful senior underwriter, but relying solely on it can be risky and inefficient. It can result in both negative consequences for insurance companies and a slow and frustrating learning curve for underwriters.  

The following are key five drawbacks to relying only on hands-on experience to train D&O underwriters:

1. Senior D&O underwriters are expected to train new joiners, but the reality is that most senior underwriters don't have the time, desire, or skill to do so. Their primary function is to write deals and develop a profitable book of business, which in today’s fast-paced world requires performing a high volume of daily tasks and activities. Therefore, for senior D&O underwriters, training other junior underwriters is time-consuming and might be a distraction from their main goals.

2. There exist D&O underwriters who, by their number of years of experience, might be considered to have a senior level but who, in reality, do not have the required high technical level expected for their seniority. Their knowledge is sometimes constrained to limited aspects of underwriting, such as mastering rating tools and guidelines and completing underwriting worksheets or work-ups. Therefore, they might not be well equipped to train junior underwriters, and when they do, the result is new underwriters with limited technical skills.

3. Most of the time, junior underwriters’ technical progression is rarely measured, making it difficult to determine whether they are improving. As the management guru Peter Drucker famously said, “If you can’t measure it, you can’t improve it.”  Moreover, as far as I know, there is no defined list of skills and knowledge required of a senior underwriter. Most companies indeed confer underwriting authority levels based on experience, but once again, this can trump an objective evaluation of technical knowledge and skills.

4. Junior underwriters lack a learning plan that includes concrete steps and milestones to become senior underwriters. It's like walking in the dark. As a result, they are unaware of how well and fast they are progressing in acquiring technical knowledge and skills. Also, their managers are not able to objectively assess the underwriter’s evolution.

5. When savvy senior underwriters resign or retire, they take with them their vast knowledge, which is not captured in a written format that can then be used as training material for new underwriters. Therefore, a significant wealth of knowledge is lost forever. Although they may have transferred some of that knowledge in their interaction with other underwriters, that transfer is inefficient.

 The five drawbacks noted above show a clear need to challenge and rethink the traditional training of D&O underwriters. “It has always been done this way” is not the right answer. It is possible to do better. This is why we have created the D&O Training Hub. We want to provide new training methods and ideas and contribute to advancing the insurance industry and the D&O line of business in particular.