After 30 years in the underwriting business, Jerry Brown is retiring at 52 to go fishing for catfish in Spain. He says challenging how underwriting was done in the past and helping to bring the industry into the 21st Century have been the major successes of his career but now he can no longer resist the lure of the undeniably ugly fish.
The Swiss Re head of underwriting and claims is particularly proud of his involvement in putting in place appropriate questions for HIV and helping the Association of British Insurers update these for its new critical-illness standard definitions introduced this year. “The way we underwrite has got to be appropriate for the society at the time,” he says.
When Brown joined the protection industry, it was based on whole-of-life policies and mortgage endowments. The emphasis has since switched to pure protection products and term insurance although he describes this as a mixed blessing.
“The focus on term insurance has driven down price and allowed us to look purely at the protection angle but too much focus on price is quite damaging for the industry in the long term. In the short term, it is great for consumers and intermediaries but in a commoditised market where price rules, if people want to add on service, it does not seem to be valued.”
He also feels the emphasis on price has stifled innovation. In fact, Brown says he has witnessed little innovation over the past 30 years and that the focus on pure protection products has made products even more rigid.
“If you go back to the days prior to the domination of term business, you could add on a whole host of riders and what was a pretty straightforward life contract could become many different things that could provide different types of value to the consumer. These days, straight term is straight term and critical illness is critical illness. The industry seems to have lost the willingness to structure products in different ways and the flexibility which gives consumers more choice.”
Brown gives the ABI’s CI standard definitions as an example. He says these have brought greater clarity to products, which is beneficial to consumers, intermediaries and providers but standardised definitions make it “very, very difficult” for providers to be innovative with product design.
The one area where he says there has been innovation is in the way products are underwritten. As he predicted a decade ago, electronic systems and teleunderwriting have become commonplace and Brown feels proud to have been involved in this evolution.
“Underwriting is certainly more evidence-based and logical now. We are finally seeing electronic systems, teleunderwriting, more consumer interaction and better data being collected in the underwriting process.”
But Brown says there is still work to do. He challenges the next generation of underwriters to take the process further and offers two ideas to get the ball rolling. First, he suggests a system where factors such as age and gender are programmed in to a provider’s electronic system, which could speed up the process significantly.
“If you have a system that can reflect where the business is coming from in terms of the distribution channel or the age or the gender, then you can do things very differently. For example, if you are dealing with a 30-year-old female, why ask if she has had coronary artery disease when the chances of that happening are quite small but there is a whole host of other questions that might be very important.”
Second, he suggests a system of preselection. Life companies, banks and building societies have a database of customers about whom they already know a lot of information. He suggests they could use this information to gauge the level of risk and avoid traditional approaches to underwriting. This will also help them give a more accurate quote.
Brown believes the Law Commission’s proposals for a five-year non-contestability period are a step in the wrong direction for underwriting and the industry in general. “I think it is inappropriate. There needs to be a level of equity. If people are able to play the system so that if they fail to disclose and after five years we cannot act on that non-disclosure, there is far less incentive for consumers to tell the truth. This will lead to prices going up and the people who bear the cost of that are not the insurers but ultimately those consumers who do tell the truth.”
He says insurance has to be based on a fair balance of knowledge between the insurer and insured and any intervention that stops or interferes with that balance is likely to destabilise the way insurance is written.
“Most people who non-disclose get away with it so there needs to be a degree of equity or we will have to do much more underwriting to detect the non-disclosure. Then you get back to consumers losing the will to live before they get to the end of the application form.”
Born: London, 1955
Lives: South Woodham Ferrers, Essex
Career: 1977-2007 – various underwriting and account management roles at Swiss Re/M&G Re. Currently head of underwriting and claims
Likes: Fishing, golf, science fiction, keeping fit, Arsenal, dragging the underwriting fraternity into the current century
Dislikes: Soap operas, bureaucracy, DIY, being serious
Drives: Porsche Boxster
Film: Currently The Tigger Movie, which I look forward to watching regularly with my grandson. Otherwise, any of the Indiana Jones trilogy
Book: The Silmarillion by JRR Tolkien
Band: Led Zeppelin
Life ambition: To catch a 200lb wels catfish and get my golf handicap down to single figures
If I wasn’t doing this I would be …… A sports psychologist