Tele-underwriting can reduce the time required to process protection applications and in some cases, eradicate the need for additional medical evidence, says Gerry Warner
The wonderful thing about our industry, and perhaps more particularly, the protection market, is that strong competition for business has given rise to almost constant development.
New entrants realise how difficult it is to compete on price alone, and even if they can offer some of the cheapest prices in the market, woe betide those who get the processing side of the business wrong.
What the market has seen in recent years is a radical improvement in the way business is acquired and placed on the books, which is great news for both customers and distributors alike.
Sophisticated
With the advent of online processing, traditional paper applications have not disappeared overnight, nor indeed are they likely to, even if commission payments start to reduce when this medium is used. Paper will be around for some time to come and the sector has even seen a move towards the inclusion of more underwriting questions in an attempt to gather as much information as possible at the first point of contact with the client.
Over the past few years, there has been a major move away from paper to online processing and within that, the underwriting of business has developed substantially. The industry has moved away from systems that only accepted clean applications to the much more sophisticated tools now in use, which incorporate a degree of reflexive questioning, allowing a greater proportion of cases to be offered terms without human intervention. Faster and more consistent decisions, an ability to be on risk within a very short space of time, excellent pipeline and management information all combine to ensure that processing has improved quite dramatically.
Currently, online processing does however require the adviser or perhaps the customer to input the details into the host system. Some advisers will argue that the additional commission for doing so does not compensate for the extra work involved. Others have criticised these electronic systems for being too rigid, for failing to allow a degree of 'free text', which some customers might value when their answers do not quite match the questions asked. These cases may automatically fall out of such a system, but better to provide the means to answer a question more fully, than not. A good system will always provide the option to abort, or talk to an underwriter at some point along the way.
Talking to underwriters is the next stage in the processing evolution - almost the exact opposite of the online processing mentioned previously. Tele-underwriting, or perhaps it should be referred to as tele-interviewing, takes the form-filling away from the client or adviser, and places it firmly in the hands of the provider, or a third party appointed on behalf of the provider. Perhaps not surprisingly, this concept has made the transition from the US where it has been in operation for a number of years, with growing popularity.
The birth of tele-underwriting in the US began in the late 80s, and today some 80,000 calls a month are made using this facility. The US has seen a rise in the number of cases outsourced to third party providers who have built up experience in this market, and that trend is beginning to emerge in the UK with a number of companies now offering such services. However, whether it is a provider or a third party making the call, an adviser needs to be assured that this will not damage his or her relationship with the client. The last thing an adviser wants is to lose the client after making a recommendation to use a particular company.
While a number of tele-underwriting models are in use, the basic premise is that the adviser gathers client details which he passes to the provider, agreeing with the client a suitable time and date for the 'interview' to take place. At the point of sale, likely information to be gathered in addition to personal details is occupation, height and weight, GP name and address, and smoker status.
The client will be advised of the tele-underwriting process and will be asked to be ready with details of his or her medical history, along with any current medication or treatment being followed. This gives the client the opportunity to check on anything they are unsure about.
The client then receives a call at a chosen time, such as in the evening and in a place where it is more convenient to talk freely, if they have to, about their medical history. It is also possible, if not highly desirable, to match the interviewer with the client, in terms of age and gender, making the actual interview a more comfortable event.
The results in the US have been good. The client provides information in private and evidence indicates it is a better customer experience and of course, the resultant plan can be in place much more quickly. The adviser, having earned commission through the advice given, finds his or her time is freed up to do more of what they do best.
Time consuming
Conventional form filling can be both time consuming and potentially embarrassing especially if the client is also a friend or close associate. With tele-underwriting it is easier to track cases in pipeline and of course, speedier processing brings earlier commission payments. The provider has the opportunity to get better quality information through more detailed questioning and potentially less medical evidence. An intelligent underwriting tool will facilitate the process, ensuring that the call centre does not have to be manned completely by fully-trained underwriters. Non-disclosure should also be reduced and the industry should see fewer cases declined. Generally, the provider experiences faster policy issue, with more satisfied customers. Better underwriting results should lead to improved reinsurance terms, which in turn, can lead to lower premiums.
With the threat of advisers being held responsible for unpaid claims due to non-disclosure of material facts where they have been deemed negligent, tele-underwriting might provide a welcome alternative. Clients should be sent copies of the questions asked, the answers given and will be required to check for accuracy and omissions. Whether they need to sign to affirm their agreement is still under debate and some providers may be content with the fact that this check has been made. Others may not assume risk until a signed declaration has been returned to them. In any event, this final check and a last chance to correct any errors sits well in a market that continues to be tainted by non-disclosure. Non-disclosure, innocent or otherwise, helps no one, and any action to prevent or minimise it, must be welcomed.
Of course, there are intermediate steps to the full tele-underwriting process. A provider may use the telephone to contact the client quickly where an answer has been omitted, or requires further clarification. Similarly, a call might be used as an alternative to a client questionnaire. Used properly, it can reduce both processing times and the need for additional medical evidence.
Tele-underwriting may not work for every client, especially those with complicated medical histories where reference to a doctor's report, or medical examination will be necessary. It will, however, be a boon to a major segment of the protection market, and will soon be a common feature within the industry. Choice is the name of the game, and the large and effective competition that exists today is helping to widen choice to the benefit of all interested parties.
Gerry Warner is protection development manager at Zurich
COVER notes
• Faster and more consistent decisions, an ability to be on risk within a very short space of time, excellent pipeline and management information all combine to ensure that processing has improved quite dramatically.
• Tele-underwriting takes the form filling away from the client or adviser and places it firmly in the hands of the provider, or a third party appointed on the behalf of the provider.
• Evidence indicates that tele-underwriting is a better customer experience and allows the resultant plan to be placed on risk much more quickly.
