Debbie Kennedy explains how tele-underwriting can improve client disclosure and avoid future claim disputes
Protection is all about insuring people against calamities they hope will never happen. So when something does happen, whether it is death, a critical illness (CI) or loss of income, a disputed claim is the last thing anybody involved wants to have to deal with. For the customer, it adds huge stress to an already troublesome time; for the adviser, it creates worry about the integrity of their sale; and for the provider, it creates the unwelcome potential for damage to the company's reputation.
Real benefits
Many disputed claims revolve around what is sometimes called the 'who said what to whom, and when?' scenario. Did the customer disclose a pre-condition, or were they told by their adviser that it did not matter? Was the provider informed, but did they fail to investigate further? Who can prove definitively what communication took place and whether key issues were discussed, clarified or investigated?
At a time when the financial services industry must work to restore consumer trust, this type of dispute does not help at all. This is where, in the protection sphere, tele-underwriting could have a significant role to play. Experience to date has shown that tele-underwriting can significantly enhance levels of disclosure. And as all calls are usually recorded, there is an in-built audit trail that can help to counter the 'who said what to whom, and when?' syndrome.
With tele-underwriting, the adviser and client fill in a shortened application, detailing who the client is, a few basic details and what they are applying for. Once this application is received, the provider will call the client either to collect their health and lifestyle details or arrange a more convenient time to call back. At the end of the telephone call, the tele-underwriter will be able to give the majority of clients a decision about their application.
For non-standard cases, tele-underwriting can provide real benefits for all parties. It can help to get better levels of disclosure on areas traditionally considered problematic, such as smoking, drinking and even drug taking. As the calls are recorded, there will be clarity for both client and provider over what was or was not asked or answered; therefore, avoiding ambiguity at claim stage over matters of non-disclosure. This will also protect the adviser from any liability in a claim dispute.
Depression and musclo-skeletal disorders are other areas where traditionally, underwriters have almost always resorted to obtaining medical evidence. Instead, with in-depth, clear and sensitive questioning, the tele-underwriter can gain detailed information from a client in a short space of time.
With a 'depression' disclosure, the provider can find out much more about the circumstances surrounding its possible cause. For instance, is it a sustained depression or a 'stress reaction' to life events? Has the applicant had time off work? Were they on treatment, and how long did the symptoms continue?
All this information can quickly and easily be gained without the need to apply for a GP report, which can take weeks to arrive. From detailed questioning over the phone, the majority of clients will go on to be offered terms at the end of the call without recourse to additional information. Additionally, and equally important, the questions will identify those few applicants who do need more careful analysis before a decision can be given.
Of course, there will always be disputed claims in protection, and tele-underwriting will not completely remove that. But it should help to provide much greater clarity when a dispute occurs, which will be in the interest of all the parties concerned.
There are other advantages too, the speed of the process being principal among them. It can get the customer covered faster, which is always in their interest, and it also means that the adviser can speed up their turnaround times and see more clients. Traditionally, the adviser has spent a large amount of time asking the client for health and lifestyle information and then helping to complete a lengthy application form. This is not the best use of time for advisers whose job is not to help customers fill in forms but to provide valued financial advice to their clients. Tele-underwriting removes most of this workload.
Investment
Tele-underwriting in the UK is still in its infancy, and will face challenges. Providers will need to constantly hone and improve the nature of the scripts they use with clients, monitor the duration of call times, and ensure that risk selection is not compromised.
It also requires investment. But if a provider is prepared to make that investment, it is one that should soon pay for itself in the form of richer customer data, better claims experiences and a faster inflow of new business onto the books.
Debbie Kennedy is head of underwriting at AXA
COVER notes
• Many disputed claims revolve around what is sometimes called the 'who said what to whom, and when?' scenario.
• For non standard cases tele-underwriting can provide real benefits for all parties.
