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
However, on the other hand more and more we are relying on customer disclosure to underwrite as we are getting less medical evidence. Companies report different levels of non-disclosure and currently non-disclosure ranges from 3% up to greater than 20%. Also companies monitor non-disclosure in different ways and there are a number of tools that companies use to monitor and target it.
All the different ways of checking non-disclosure (listed below) will help identify trends which will feed into more specific targeted checks or justify a specific course of action to reduce non-disclosure.
Carrying out post-issue checking does not come without challenges for companies, one of them being the actual cost of it and while this has a high initial outlay SCOR believes that the benefits outweigh the cost.
There are a number of logistical issues that companies need to consider before undertaking post issue checking, for example:
• The selection process
• System restrictions
• Details to record and how to analyse the findings
• Notifying sales that this monitoring is being carried out
• Updating application forms with non-disclosure checking
• Dealing with customer queries
• Ensuring resource is available to sustain this activity follow up action from findings.
There are numerous benefits for carrying out non-disclosure checking; analysing the findings and reducing it:
• Correct terms offered to more applicants and correct premiums being paid – more premium income
• Certainty for the customer of the claim being paid
• Declined lives are declined at outset
• Better claims experience
• Reduced reinsurance rates
There have been a number of important developments over the last decade in regard to underwriting; tele-underwriting; improved proposal forms; and expert underwriting systems to help improve taking out life assurance.
As an industry we have made significant progress in the customer journey, however getting the business on the books is not where the journey ends for our customers. Non-disclosure is still a very important issue and needs to be reduced.
We have a responsibility to ensure good-quality applications are received; customers get the appropriate terms to the risk they present; and, most of all, we want to ensure that claims are paid without delays. This in turn will help companies keep costs down and benefit from better reinsurance rates.
Everything in life changes, that is a fact. But when that change results in an insured event happening we want customers to know their policy will pay out.
Coming soon - Plus ça change (part deux) will look at the benefits and implications of health-checking underwriting systems.
Catherine Lyons is underwriting and claims development manager at SCOR Global Life
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