An examination of the effectiveness of a training programme to improve decision making in insurance risk underwriting

• Main Author: MAISTRY, Gavin Raj
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: intuitive judgement; deliberate judgement; scripts; simple rules; expertise; mindfulness; Business Administration, Management, and Operations; Management Sciences and Quantitative Methods
• Online Access: https://ink.library.smu.edu.sg/etd_coll/247; https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1247&context=etd_coll
• Institution: Singapore Management University

This dissertation studies the effectiveness of a training programme to improve decision making in insurance risk underwriting. A key component of insurance risk underwriting decisions is qualitative judgement, in addition to quantitative analytical modelling. In the training of insurance underwriters, great strides have been made on the analytical side. However, the training of judgement, both intuitive and deliberate, has largely been ignored. The aim of this research proposal is to design and test a training programme to improve judgement in insurance underwriting. Our research extends the script training concept, used extensively in medical training, to the domain of insurance underwriting for the first time. As part of the research, we interviewed underwriters of varying levels of experience. We looked to capture the scripts of experienced underwriters; contrast this with novices and then use these as a training tool for underwriters. We then also looked to extract the simple rules that underlie the intuitive judgements in insurance underwriting and use these to formally train more deliberate judgements. The training intervention was administered to groups of professional underwriters and also groups of students. The impact of the training was measured for both accuracy and consistency improvements in underwriting decisions. Control groups were also established. We also examined the moderating impacts of experience and some components of mindfulness on the training impact. The results suggest that the combined scripts and simple rules training improves both quality and consistency of underwriting decisions (when compared to the control group). The training design contains the key components needed to develop expertise – the scripts technique gives exposure to many cases; the simple rules then provides systematised knowledge and the underwriting process ensures objective feedback. This study has the impact of accelerating the development of underwriting expertise and could potentially save companies billions of dollars in poor underwriting decisions. The proposed training design could potentially fundamentally change the training of underwriters to include formal training on the important aspects of intuitive and deliberate judgement. This will then also help prepare underwriters for managing risks in an increasing innovative and riskier world.