Underwriters Are People Too

Do underwriting manuals include a “bias” factor calculation?

“In 2015, we conducted a study of underwriters in a large insurance company. Forty-underwriters were shown realistic summaries of risks to which they assigned premiums, just as they did in their jobs.”

“How much of a difference would you expect to find between the premium values that two competent underwriters assigned to the same risk? Executives in the insurance company said they expected about a 10 percent difference. But the typical difference we found between two underwriters was an astonishing 55 percent of their average premium — more than five times as large as the executives had expected.”