This article, written by Paul Willoughby, highlights the importance of portfolio management as well as providing practical tips for assessing your organisation's strategy.
Portfolio underwriting, including broker facilities, trackers and delegated authority agreements, account for a substantial and growing share of the Lloyd’s and London market. Some estimate it could be upwards of 40% or more of the market, making it one of the single biggest levers insurers can pull to improve overall profitability. Yet many insurers underinvest in portfolio management because they assume it’s too complex, too disruptive, or simply ‘too big an ask’ to tackle quickly.
The reality? A well-structured, data-driven approach to portfolio underwriting can deliver a direct, measurable impact on the bottom line - and it doesn’t have to be a massive, all-at-once transformation. You can start small, learn fast and expand once you see the evidence of increased profitability.
Why portfolio management matters so much right now
- A direct path to profits
Unlike certain operational overhauls where the payoff might be “we’ll be a bit more efficient” portfolio management initiatives tie very clearly to underwriting results. If your aim is to “write better business, be more profitable,” then portfolio underwriting offers one of the most straightforward routes to success. - A large slice of the pie
With binding authorities, consortia and line slips potentially covering hundreds or thousands of smaller risks, portfolio underwriting can make up nearly half of an insurer’s book in some cases. Even modest improvements across this portion of the business can move the needle on your combined ratio. - Low risk, high reward
Investing in better data flows, analytical tools and consistent review processes pays off quickly when you can pinpoint profitable segments to “double down on” and identify underperforming areas to pull back from. It’s the essence of good underwriting: you’re allocating capital to the best bets while shedding or re-pricing poor performers. - Carrots, yes - but also the stick
The poor performance of the delegated book was one of the contributors to Lloyd’s deteriorating loss ratio from 2013 onwards. In a recent Insurance Journal article, Lloyds Chief Underwriting Officer Rachel Turk warned “We must not make the same mistakes again.” While Ross Banker, (partner at Beale & Co, a member of Global Insurance Law Connect), noted that “Lloyd’s has made it clear that there must now be a laser-sharp focus on the framework in place for the selection, oversight and performance management of delegated providers.” Particularly in the spotlight is the problem of out-of-date data, with Lloyd’s now expecting real-time performance data of the highest quality.
Overcoming common roadblocks
- “This sounds disruptive.”
Many insurers assume that building portfolio-management capabilities requires an all-or-nothing approach. In reality, you can begin with just two or three binding authorities out of a portfolio of, say, 100. This pilot approach validates the process without tying up all your resources. When you see the quick wins, you scale up. - “Our people are too busy.”
Yes, new efforts take time. But portfolio underwriting brings a direct link to profitability. You don’t have to rely on vague gains like ‘improved efficiency.’ Instead, you can measure actual underwriting performance changes. Once teams recognise the tangible upside, it’s easier to secure buy-in. - “Technology procurement will be a nightmare.”
It’s true: compliance, security reviews and procurement can feel daunting. But plenty of modern platforms and tools are designed to slot into existing data pipelines without an ‘everything must change’ approach. You can also often test-drive such solutions. If your organisation can push past the initial red tape, the payoff can be swift. - “Isn’t this already ‘baked in’ to standard underwriting?”
Not exactly. Whilst most insurers will already assess the quality of their portfolio business as part of their initial underwriting and renewal processes, this is often done infrequently (i.e. annually) and in some cases only for distressed books or those of significantly scale. With the correct methodology, backed by appropriate technology, portfolio management cycles can be moved to monthly or quarterly and for all relevant books of business.
What success looks like
Some Lloyd’s research found that the difference in underwriting results between top-quartile and bottom-quartile companies (in terms of portfolio management rigour) could be 8–9 points on their combined ratio. In an industry where a few ratio points can separate the winners from the also-rans, that’s massive. It’s also why those who invest in portfolio management now will enjoy a clear head start on their competitors – until that is, everyone else catches up!
Key success factors include:
- Reliable data: A single, standardised process for capturing delegated authority data so it can be easily analysed by underwriting, actuarial and operations teams.
- Frequent review cadence: Don’t wait for annual renewals; monthly or quarterly analytics let you spot underperformance or double down on success earlier.
- Cross-functional buy-in: Operations, IT, underwriting, actuarial and finance need to coordinate. Once you’re all aligned, the friction around data and analysis drops.
- Actionable insights: Beyond producing charts and tables, successful portfolio managers convert data into concrete underwriting decisions - where to raise rates, where to reduce them, which lines to scale up and which ones to exit.
Practical Tips to Get Started
Pick a pilot
Identify a small subset of binding authorities that have decent data quality or a manageable scale. Start there to prove the concept – which it is possible to do in just a few days.
Leverage external help
Whether it’s specialised analytics providers or new technology platforms, you don’t have to build everything in-house. Sometimes external partners can jump-start your initiative without a massive internal IT lift.
Make it a two-day test
If you can align the right people (one underwriter, one actuary, one operation/IT lead) for a short, intense workshop, you’ll be amazed at how quickly you can move from data extraction to seeing actionable recommendations. Once you’ve got a working prototype, it’s easier to push for broader adoption.
Focus on the upside
The difference between a 67.5% and a 68% loss ratio may seem minor to some, but at scale, it’s huge in terms of company profit. Emphasise that a small improvement in your biggest line of business can translate into millions in additional profit - the kind of result any leadership team can appreciate.
Conclusion: act now or lose ground later
The insurance industry is steadily waking up to the power of portfolio underwriting. But there’s still a window of opportunity for those willing to invest. Early movers can refine their data practices, develop cross-functional processes and capture profitability gains that show up directly in their results. Meanwhile, slower adopters risk being left behind, forced to play catch-up.
The good news is that you don’t need a sweeping transformation all at once. You can start small, prove the ROI and then expand. It’s precisely because portfolio underwriting directly links your efforts to underwriting profit that it stands out among all the possible initiatives on an insurer’s to-do list.
The best time to start was yesterday. The second-best time is right now.
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