I work in group disability, and I've done a bit of time working with manual rates, pricing and underwriting and I've gotta know, is it all like this?
Specifically, I manufactured our manual to be nearly 20% higher than expected sold rates, knowing that underwriters will discount down to tolerable and then try to fix it on renewal. I can see other carrier's manual rates, and I know dang well that the rates they are putting on the street are anywhere from 50-80% of the true manual rate. Nobody is selling a decent amount of business at manual. From what I gather, most companies have fairly subjective criteria too. The true rates represent what the underwriter is "comfortable with" given vague notions about the comany and industry.
Are other business lines like this? Do (or did, pre-aca) health Underwriters use the manual rates like a fat man uses a rotisserie chicken? (i.e, what comes out of the process resembles the inputs in only the most bare bones sense)
What about life? Do life underwriters do so much discounting?
Don't get me wrong. I like to believe that we have the best underwriters in the industry under our roof, so it gives us some competitive advantage, but to what extent is the rest of insurance so bizarre?
Specifically, I manufactured our manual to be nearly 20% higher than expected sold rates, knowing that underwriters will discount down to tolerable and then try to fix it on renewal. I can see other carrier's manual rates, and I know dang well that the rates they are putting on the street are anywhere from 50-80% of the true manual rate. Nobody is selling a decent amount of business at manual. From what I gather, most companies have fairly subjective criteria too. The true rates represent what the underwriter is "comfortable with" given vague notions about the comany and industry.
Are other business lines like this? Do (or did, pre-aca) health Underwriters use the manual rates like a fat man uses a rotisserie chicken? (i.e, what comes out of the process resembles the inputs in only the most bare bones sense)
What about life? Do life underwriters do so much discounting?
Don't get me wrong. I like to believe that we have the best underwriters in the industry under our roof, so it gives us some competitive advantage, but to what extent is the rest of insurance so bizarre?
Underwriter Discounting
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