“You get towards the end of the month and you don’t have your premium budget met yet. How does your brain process that next opportunity that comes across your desk?” asks A. Morris Tooker, head of Middle Market at The
Hartford.
“The reality is you process it differently, because you have different pressures that you face and it’s not conscious.”
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In all activities in life, we make decisions influenced by our unconscious biases – and, as Tooker has studied, underwriting is no different. Just as in other aspects of life and work, we need to realize the biases we have, and work to mitigate their effects on our decision-making, he says.
“People have a starting point in mind, even if they’re not aware of it,” he notes. “You have some habits and some propensities that really you don’t control. There’s a natural loss aversion that we all have, just in the way the mind has been built.”
Tooker, who started investigating unconscious bias in underwriting before joining The Hartford in 2015, and continuing it since, took “a pretty deep dive” into the “downfalls of the human brain in the underwriting process,” he says. He discovered that there were a series of biases that come into play when making underwriting decisions.
Some of the biases in insurance underwriting include loss aversion, regret avoidance, ambiguity aversion, familiarity bias, narrow framing, and obedience to authority.
“[Then] we started looking at what fixes we can make, knowing that you can’t make them [the biases] go away since they are a natural part of the way we make decisions, but how can you minimise the impact that biases have over time,” he explains.
And when it comes to countering the unconscious biases, Tooker says organizations can benefit from a diversity of thought in the decision-making process. And also, quite simply, a “basic awareness” that you possess unconscious bias is another great way to counter its effect.
“There are three stages we talk about,” he says. “One is really about awareness. Basic awareness helps [once] you realize that your brain makes shortcuts. The second is we do believe there are some fixes and techniques to help minimize [the effects of your biases]. The third step is we do believe it’s a lot about the culture you create that ultimately cements a lot of these habits.
“If you can have [an environment] where people are challenging decisions and thinking more broadly about how to make decisions, that, ultimately, is probably the best way to minimize these things over time.”
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