On the face of it, it appears to be a good time to be an underwriter. A combination of historic underperformance, an elevated risk outlook and investor reticence is encouraging underwriters to push the envelope in terms of information requirements, policy conditions and pricing demands. It’s hardly the time to worry about key performance indicators (KPIs).
In this article, we challenge this assumption. Focusing on underwriting, we argue that now is precisely the time to revisit KPIs—not just for the here and now but across the market cycle. Otherwise, ineffective KPIs run the risk of actively undermining the very discipline and technical frameworks that management have established to ensure their firms’ financial sustainability.
Executive SummaryCompanies need to enact long-term performance measurement and strategies for underwriting discipline across the underwriting cycle because evidence suggests underwriters will not impose it themselves, according to Tony Buckle and John Carolin, co-founders of the boutique insurance consultancy UWX, in the second part of a two-part series.