Creating a Predictive Model to Improve Underwriting Team Effectiveness

Executive Summary

The successful identification of the factors influencing underwriting performance was a major step forward in understanding. The study, designed and conducted by Christina Griffiths & Birkbeck University, with the support of one of the leading players in the insurance industry, clearly established a link between cognitive ability, decision making styles and risk attitudes that directly impacted and predicted job performance.

The identification of the psychometric measures was a first in the academic world and the underwriting industry. Combining Christina’s strong business focus and academic acumen, she focused the next phase of her work on using the job performance factors to develop a ‘Team Effectiveness Framework’ to predict the performance of underwriting teams.

The selected organization, a large global insurance company (LGIC), which had already demonstrated their commitment to the project as a way of driving industry knowledge further, continued their support of the work and provided access to several of their high-performing underwriting teams as participants in the study.

As a result of this second phase of research, a highly efficient Team Effectiveness Framework supported by a set of established and well-tested psychometric instruments was developed.  Taking a comprehensive approach, these tools enabled the identification of a broad set of variables, which identified team performance in terms of conditions, processes, outputs and feedback.

The efficacy of the framework was tested on multiple teams within the LGIC and proved to have a strong ability to predict team performance. This in turn had an impact on recruitment, retention and long-term development of the teams.

Premise

The 2012 study on Underwriter Job Performance conducted with Insurance Underwriters, provided some ground-breaking insights into the drivers of individual underwriting performance. The driving premise behind the research was that, statistically speaking, human beings do not tend to make good decisions about the perceptions, abilities and behaviours of other human beings.

Psychometrics provide a dispassionate means of assessing these factors, and, in turn, provide insights that are more accurate than those available through simple, and often short-term interactions.

The successful identification of the individual factors, lead to the second phase of the research, which focused on using these factors in a team environment to predict team performance.

The Research

The support of the LGIC during the research process was critical in testing the framework in a live environment. In providing access to several of its underwriting teams, managers and underwriters, the LGIC enabled the study to be a practical, result-focused endeavour. The research was divided into two phases:

Phase 1

1. Using a Job Performance measure, developed through detailed discussions with the Group Underwriting Board, the UK Underwriting teams were ranked in order, independently of the research team.
2. Two underwriting teams of differing performance were selected from the same insurance business category.
3. A series of psychometric tests were selected, adapted and administered to the selected underwriting teams.
4. The data provided had to predict the relative performance of the selected teams and relate this assessment back to the Job Performance measure.

Phase 2

Using the psychometric tests developed and then tested during Phase 1, the next step was to use and improve the psychometrics and delivery process by running the project again, but selecting two underwriting teams from two different business insurance categories.

In both phase 1 & 2, the research was undertaken by the researcher without knowing where each team was ranked in terms of the team job performance measure.

For Phase 1, Psychometric tests based on the predictive job performance factors identified in the earlier study were tested and shown to provide reliable insight into individual ability and behaviour. Additional research enabled the identification of the Team Effectiveness Framework that was able to identify and measure team performance among Underwriters across 4 key indicators. Team based psychometric tests were used to test the efficacy of the model across its components.

Once the results of Phase 1 were reviewed and found to be an accurate predictor of team performance, Phase 2, which focused on two different underwriting teams was implemented.  The analysis focused on the 4 components identified as a part of the Team Effectiveness Model.

• Conditions: Representing the context and people components, measuring “demand vs. capabilities”. Teams are considered effective when the capabilities of the team are considered equal to or greater than the demands placed upon it.
• Processes: Different task and team focused behaviors including managing information, making decisions, maintaining vision and intent while motivating and adapting to the needs of the team. These behaviors utilize the strengths inherent in the capabilities component of the model.
• Outcomes: These were considered on the basis of the team achieving its goals, its “Task Outcomes” and continuing to develop itself “Team Outcomes”.
• Feedback: The model provided multiple feedback loops within it to enable adjustments on processes, conditions and overall organizational learning.

Results and Application

The two phases of the research identified clear, actionable differences among high-performing teams of Underwriters. The Team Effectiveness Framework and accompanying instruments took a comprehensive approach to evaluating teams and identifying a wide variety of variables that can provide insight into what is happening within a team in terms of its conditions, processes, outputs and feedback.

The analysis also enabled the identification of clear steps to be taken to enhance performance on an individual, team and organizational level, including skills training, changes to business strategy and how talent was retained and engaged.

The Team Effectiveness Framework provided a range of reports to support future activity:

• Team Effectiveness reporting to identify gaps for under-performing teams
• Team Member Effectiveness reporting to be used during the recruitment of team members into new teams, or the restructuring of existing teams
• Targeted Team Effectiveness program to action the key findings from the Team Effectiveness report.
• Team Intelligence Model, where intelligence gathered from the team reporting is used to build a model that better predicts the company Team Job Measure

Some of the specific benefits of using this model included:

• Improved Underwriting Team performance, based on the Job Performance Measure
• Leveraging existing talent and enhancing engagement by focusing on building up existing strengths of team members
• Improved ability to attract and retain new talent to the strong teams, offering high levels of morale and cohesion
• Development of additional programs to improve how teams operate within the organisation

Conclusion

The development of the Team Effectiveness framework is a great stride forward in the world of Insurance Underwriting. With the ability to analyse and understand the drivers of individual and team performance, the quality of recruitment, development, and retention is enhanced, leading to stronger performance across the board. The Team Effectiveness Framework provides insight and practical, actionable intelligence, and enables a more effective way forward for the management of high-performing underwriting teams.

The Partner Organization

The LGIC was a P&C insurer and reinsurer with six underwriting hubs in London, Bermuda, the United States, Asia Pacific, Europe, and Canada. Domiciled in Bermuda and listed on the London Stock Exchange, it owned and managed the largest Lloyd’s syndicate since 2000 and had a network of offices in more than 50 cities with more than 2,300 employees in 25 countries. It had a deep commitment to research and innovation and furthering the state of knowledge in the industry within which it operated.  Since the time of this study, it has merged with another large global insurance company to form one of the world’s largest providers of insurance underwriting services.

About Christina Griffiths

Christina is a globally oriented and innovative NED and consultant psychologist, with extensive experience in the insurance, technology, and consultancy sectors. She has a track record in improving the performance and productivity of revenue-critical professionals. By combining her scientific expertise and commercial acumen with emotional sensitivity and natural curiosity, she is able to improve the capability of organisations, teams and individuals.  As a result of collaborating with her clients, they report that they find the insight and courage to make the changes required to improve performance and raise their game