Protecting complex property under turbulent conditions
The 2017 hurricane season is already unlike any other in recorded history. While that might rattle some property insurance underwriters, it does not unnerve XL Catlin’s Michele Sansone. Here’s why.
2017 has already been costly – totaling $7.3 billion in cat losses – not including recent losses from Hurricanes Harvey, Irma and Maria. How does your team prepare its clients to withstand cat events and minimize their potential losses?
Good accounts have losses. That’s what insurance is for. After events like Irma, Harvey and Maria, companies really start to recognize the value of their insurance coverage, but what we want them to value even more are the relationships we’ve built with them.
First and foremost, we want our clients – and our brokers – to clearly understand the coverage they have -- so there are no surprises when a hurricane, fire or theft occurs. That means we talk with our property clients and brokers often. After a loss, it’s amazing to hear stories about individuals or businesses that are caught off guard about coverage.
The importance of this interaction cannot be under-estimated. For example, our underwriters work closely with our property risk engineers to evaluate and identify risks from the ground up, even if XL Catlin is only insuring the upper layers. The initial report, including a detailed property risk engineering analysis of the clients’ risk, is provided right to them. We share this information, including data analytics, predictive modeling, risk evaluation and recommendations to initiate conversations with our clients about how to mitigate the risks they face and to look at longer term strategies to improve their risk evaluation.
This constant dialogue with our clients also helps us develop or enhance our coverages based on their needs. For instance, in the last year, we increased our capacity to USD 500 million on a layered/quota share capacity and developed of a terrorism endorsement for our Platinum Property clients, or clients who have 100% of their property insurance with us.
Despite historically low rates, you and your team have managed to grow your business. What’s your secret?
Growth may be harder to come by in today’s world but it’s not impossible. Rates have been stagnant and there’s plenty of competition out there. When events like Irma and Harvey occur, there’s always market speculation on how conditions may change. Just like we’d advise our clients, you have to be ready for everything and that includes market fluctuations. Our goal is to help our clients become better risks. We’re in this business for the long haul.
I have been underwriting complex property risks for 25+ years. As a result, I know many of the key decision-makers on both the brokerage and client side. This is probably true for most of us in this business because there’s very little turn-over in property underwriting.
Once risk selection and pricing were our primary activities. Today, we also serve as account executives, data scientists, advocates for our clients - and innovators. We enhance the client and brokerage relationship by coordinating account services such as loss control, claims and possible risk mitigation strategies. All of which strengthens our relationships, our client retention and helps us grow our business.
With all the advances in technology from big data to driverless trucks and drones, what will property underwriting look like in the next 5-10 years?
Today, we don’t have to engage in mundane tasks because technology has allowed us to become more efficient. These advances give us the advantage of time to think about those “what ifs” our clients might face. While computer data and analytics dominate the commodity underwriting areas for things like automobiles and BOP policies, there’s still a strong need for risk specialists to handle the complex property risks that we underwrite.
The technology available to us certainly helps but there’s more to underwriting than automation and data analytics. We as underwriters need to become relationship-based and strategy-driven. There’s more to underwriting than risk selection and pricing. Technical underwriting skills are still needed. People do business with people. We are a people business and property underwriting will still be driven by relationships between brokers, clients and the insurer.
Why choose a career as a property underwriter?
I grew up thinking that insurance was a glamorous business. My dad was an excess casualty broker. He got to attend black-tie affairs and he traveled a lot. I still remember his advice. He said that I might not make a lot of money in insurance, but I would always have a job.
I started my insurance career at AIG where I attended one of their underwriting trainee programs. I went on to hold an underwriting position at The Home Insurance Company and prior to joining XL Catlin, I held progressively senior positions at Zurich, including heading up Zurich’s US Northeast Property Division.
For the past 25 years, I’ve been focusing on the global property market and it’s been anything but boring – because property risks, like so much else, continue to change. We’re seen increased Nat Cat activity, increased terrorism exposure and new risks posed by technology.
I also love the idea of wondering what the overlooked risks are -- and thinking of ways to mitigate those risks. In 1992, we didn’t think a building would fall from a terrorist attack. Now, the “what if” is preparing for a nuclear event or the possibility of California, Florida or the East Coast falling off the face of the Earth.
In my opinion, it can’t get any more interesting this.
Any advice for someone contemplating a career in commercial property underwriting?
I’m still passionate about the business and take every opportunity I can to encourage others to see the opportunities it offers. I set up XL Catlin’s two-year underwriting assistant program to encourage college graduates to choose insurance as a career. Just recently, I joined my colleagues Joe Tocco, Bob Peretti and Steve Oh to chair the Spencer Educational Foundation’s annual gala fundraising efforts. We raised USD 1 million that will go toward insurance and risk management scholarships and educational opportunities.
I encourage every young person to consider underwriting as a career. Being a complex property underwriter is incredibly exciting. In what other business could you be in the front line helping all kinds of businesses prepare for the “what ifs” of the world?