Skip to main content

Underwriting manuals – strategic dilemmas (part 1)

In the past underwriting manuals were big tomes kept on the underwriter’s desk. Now they are sophisticated e-tools that sit on the underwriter’s virtual desktop. The complex nature of today’s manuals and today’s world of risk call for careful positioning, the right content and features plus a sound strategy.

This article considers some of the strategic dilemmas faced by companies that produce and maintain underwriting manuals.

The creators of these reference tools face a number of dilemmas in terms of where they take them next. What is important is a well considered and documented strategy for the manual that fits not only with the underwriting strategy but with corporate strategy too.

Important questions to consider include:

  • How often does the manual get updated?
  • How is ongoing production resourced to get real value for money?
  • Who has access to the manual?
  • Is the manual also a training tool?
  • Does it need an evidence base?
  • How can calculators help the decision-making process?

Not a one-off job…

As any developer of an underwriting manual will know, one of the biggest problems is managing the ongoing maintenance. Once you have created the monster it needs feeding regularly. The consequences if you don’t? Both content and technology can become outdated pretty quickly.

In terms of the development cycle, most existing manuals sit somewhere on the diagram below and some may well be in desperate need of movement on to the next stage of their development.

UW manual devt process 1215

It is interesting is to compare an underwriting manual life cycle with that of other products, particularly those that use technology. What is the shelf life of other technology products? Five years? Three years? Certainly for any browser-based offering, leave anything over five years and your product will be starting to show its age. (That is if it still works.)


Possibly the biggest dilemma is how to resource the production of an underwriting manual. These days, in many companies headcount restriction is a big factor in controlling and reducing bottom-line costs. To maintain a team (even a one-person team) as a dedicated resource for researching, producing and updating a manual can be seen as expensive and unnecessary by those removed from the risk management function. But a really thorough job to ensure a top-notch product can cost big bucks.

But is underwriting manual production a full-time job anyway? Does it need to be continually updated or is some regular tweaking all that is required? Categorically, manuals do need regular attention. If they are not regularly reviewed, changes in the market and regulation, and in the nature of risks encountered can mean that the content of a manual can become, in a short time, out of date: at best, irrelevant but harmless; at worst, responsible for poor and unprofitable decision-making. This is discussed in more detail later.

With the ability to carry out real-time updates to a web-hosted system, the production of a manual should be getting cheaper. The question then arises, should a manual be resourced in-house in terms of technology and content or is outsourcing or a ‘turnkey solution’ the way of the future?

Global or just all over the place?

Cost pressures often force international organisations to provide a global manual which is used in all of these territories. But does a ‘one size fits all’ approach really work?

Products are different from one country to the next. For instance, disability products vary widely between markets – in particular the definitions of disability, the product features and the triggers for claim.  Causes of claim and local experience are different too, all of which have an impact on underwriting guidelines.

In North America the situation is complicated by preferred life rate differentials. How can rating advice cope with a multitude of different product definitions? Short of tailoring content to the characteristics of each individual market, the developer of the manual can tolerate some compromises; but it is important that those do not significantly impair the credibility of the manual.

If the content is to be translated into multiple languages, that takes time and effort. An overly long and poorly managed process can result in the various versions of the manual being out of sync with each other – resulting in confusion between markets, inconsistencies and potential lack of credibility.

Managing access

On the Web, a manual usually has secure entry because the owner wants to protect its intellectual property. It wants to deny non-clients the benefits of its efforts and to avoid competitors downloading material, benchmarking ratings and plagiarising content. Secure entry also means that the producer can analyse usage, enabling a sharper focus for on-going research and development – that is, concentration on the subjects that matter.

So the issue of access to the manual presents its creator with a series of dilemmas:

  • What is the distribution strategy – who gets it?
  • Does it give it away to all and sundry for free?
  • Do only ‘good ‘clients get it?
  • Should users be charged explicitly – a cost per click, maybe?


Most manuals try to be all things to all people. Indeed most manuals claim they are aimed at underwriters of all experiences, from old hands to junior underwriters who are just learning the art (or the science depending on your point of view).

But is this a reasonable objective? Can this be achieved in the one delivery vehicle without ending up pleasing no-one? In these days when technology can provide so many tricks in terms of flexible navigation, is it reasonable to clutter up a rating guide for a senior technician with a wealth of textual content that simply isn’t needed? Equally, can a manual truly be a training tool for more junior underwriters, or should this be achieved by another, more focused, delivery method?

Another complexity surrounds who actually writes the content. If it is a medical officer, there is the possibility that the content is more accessible to doctors than to underwriters, who have to keep reaching for their medical dictionaries. Some might argue that it would be better, and cheaper to use, say, the Merck manual as a resource, but that would be far from ideal: underwriters’ information needs are different from those of the general public or medical clinicians. The right solution may be to construct a manual that is written by underwriters for underwriters, and consider training as a separate issue.

Evidence base

What level of supporting evidence is required for the manual of the future?

In recent years there has been wide acknowledgement of the need for evidence-based ratings in the same way that the medical profession has increasingly looked at similar approaches to treating patients.

It is unlikely that all the ratings in the manual need to be robustly supported by large quantities of data. But research should be applied to devising rating approaches that are up to date and in line with statistical data where it is available. This enables justification and explanation of rating policy to consumers, regulators and other stakeholders as necessary. Ratings need to differ from one geographical region to another, and maybe, sometimes from country to country within those regional boundaries. There then arises the challenge of obtaining suitable data that support these individual approaches.

In the past insurers have relied heavily on their reinsurers for evidential support to challenges, and no doubt this will continue. However, given the power and persistency of the challenges from modern-day consumers, pressure groups, etc (the Internet has enabled access to and sharing of knowledge on a scale almost undreamt of a decade ago), responses to them need to be thorough and highly credible. Importantly, action in this area needs to be much more than mere reactive defence or back-covering; consumers everywhere have the right to a fair deal from their local life, disability and health insurance industry.


The use of calculators to produce a decision is growing in popularity. But does the use of a clever ‘black box’ reduce the need for the traditional skills of the experienced underwriter? Or is there a place for both art and science in the underwriting process?

A number of manuals now feature calculators, and for a number of reasons:

  • To enable quicker and easier decision-making, for example when blood pressure readings need to be averaged
  • To lead the underwriter through the decision-making process to ensure that no steps are omitted
  • To assist on complex cases, for example where a number of cardiovascular risk factors interact with each other, and where reaching a decision requires more than simply summing the ratings for each risk factor.

Calculators are rather two-edged swords. They have the benefit of assuming responsibility for complex rating calculations, thus reducing the scope for error. But then there is the risk that the underwriter relies overly on the answer that the calculator produces and fails to see the overall picture presented – including those risk factors not covered by the software. After all, underwriters are paid to make judgments; it’s what makes them worth their salaries.

However, in these days of reinsurers wanting their clients to follow their underwriting guidelines correctly, there appears to be a trend for manuals to push underwriters away from making judgments towards a more ‘prescribed’ approach. One could argue that the desire for adherence to rating guidelines is diluting some of the traditional skills of the underwriter. Clearly a balance is required, but defining where that balance lies, and how to create and maintain it, is for another discussion.


(To be continued)