Underwriting is all about gathering relevant information in the quickest time with the highest quality. Catherine Lyons looks at the impact of underwriting changes/developments in the past 10 years
As the French saying goes, the more things change the more they stay the same. There have been a lot of changes in underwriting in the last decade, but has this led to improvements in the business processed, the perception of the industry and the customer journey or do we still have the same issues that we always had?
In essence, there are four elements to look at:
1. Underwriting Systems
As we are all aware, expert underwriting systems provide an underwriting decision either at the point of sale where the agent keys in all the information and gives the customer an immediate decision or they are processed in-house. Most providers use such a system to be able to cope with volumes of business.
One of the great advantages of companies having a system is that it can deal with peaks in volumes without compromising quality and without impacting on their underwriting resources.
It will provide consistent decisions and, depending on how interactive the system is, can provide decisions (standard/rated/declined/evidence requests) on up to 85% of cases.
Indeed there is also huge capability to produce and analyse management information. The main benefits that companies have gained are a quicker application to issue time as well as reduced new business costs.
2. Question sets/proposal forms
In order to improve disclosure, application forms were redesigned to include more specific questions and provide clarity to applicants; the warnings regarding the consequences of non-disclosure are required to be in a prominent place on the form. In addition, the use of short form applications ceased.
Tele-interviewing/tele-underwriting has been an important innovation in the last decade – a recorded telephone interview to gather risk-related information directly from the applicant; tele-underwriting is the overall process used to make an underwriting decision based on the tele-interview.
The main reasons that companies use this are to:
• reduce the need for intermediaries to ask medical questions
• reduce non-disclosure
• improve customer experience