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Perspective

Exploring the Subconscious and Habits: This Is Insurance, Right?

October 09, 2014| Von Mo Tooker | L/H General Industry, P/C General Industry | English

As I shared in my earlier introductory blog, Gen Re is on a journey to explore the influence of biases in the decision making process, especially where it relates to underwriting.

Like you, I’m an insurance decision maker - I’m not a neuroscientist. I want to understand if and how we can use insights into decision biases to improve the way we make decisions with the goal of creating a better culture for taking risk successfully. 

We’ve started by identifying a number of biases that can play a crucial role in how risk professionals make underwriting decisions. What’s interesting to us is that these decision biases exist largely at a subconscious level, so they’re not widely acknowledged nor that well understood.

The mental shortcuts our brains take when we make a decision happen subconsciously. Then emotions come into the thinking process as well - still invisible to us. Getting in touch with our subconscious and our emotions? That sounds more like therapy than underwriting, doesn’t it? Actually, it’s all to do with decision biases.

One of the most interesting - or I should say the most applicable - discoveries that I’ve made on our journey so far is what’s called the fundamental attribution error.

This fundamental attribution error inclines us to overweight the contribution that individual attitude and skill makes to our performance. We add this bias at the expense of underweighting the role played by the situation or the context in which we’re performing a task.

And why is that good news? Well, turn the proposition around the other way and change the perspective on it. By changing the context in which a task is performed, you should be able to influence the quality of the result. So instead of putting all our underwriters “on the couch,” we can substantially improve their decision making performance by re-designing the relevant processes.

After a period of trials involving various underwriting teams across the globe, we are developing a set of new process routines around critical decision making pain points. It means trying out some contextual interventions that are designed to break the intuitive behavior pattern of individuals and groups in different parts of the organization.

Essentially, we have found that by introducing new habits at key points in the decision making process we are able reduce the impact of certain types of bias.  It’s the start of a journey to transform our decision making processes and we look forward to sharing more conclusions with you in the future.

 

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