Underwriting: Plus ça change... part deux

clock

As stated in July, the more things change the more they stay the same - but how are systems checked and how are they assessed? Gill Salton explains.

Underwriting has been a changing beast over the past 10 years. Standards have certainly improved with the use of more detailed application forms, tele-interviewing, expert underwriting systems and increased medical evidence limits.

In addition, the standard of companies' internal auditing has greatly improved, which has also had the knock-on effect of increasing underwriting standards and has helped to drive cheaper reassurance rates. To further develop underwriting we still face other challenges, e.g. from non-disclosure and the efficiency of underwriting systems.

However, companies have implemented underwriting systems and improved their internal auditing methods. This has resulted in high quality immediate underwriting decisions that allow distributors to manage their customers' expectations.

Smarter auditing

With all the improvements in underwriting, it follows that auditing also needs to be smarter and other auditing methods need to be adopted.
Historically, auditing has been left to the reassurers who reviewed a specific number of cases to gain a view of the underwriting standards of a company. This could be seen as looking for a needle in a haystack of 200 or so cases and is often no longer appropriate to the way in which companies currently operate.

Most major companies now use internal quality checking as the basis of their auditing. Large companies have dedicated auditing teams who are auditing thousands of cases per year and have implemented sophisticated auditing processes.

Not only does this ensure a high standard of underwriting with fewer errors, it also gives reassurers access to a far greater auditing resource than they could ever achieve. The reassurers can review the internal auditing process and the quality/consistency of the auditing decisions and suggest recommendations to improve the process and/or quality.

Once the process has been agreed and the quality of the auditing is of a good standard, reassurers can be satisfied the company results being produced as part of the regular management information reporting, are credible.

Reassurers may then focus their future auditing on a sample of the company's results to ensure the standards previously agreed are still being reflected. The company with the best process and highest quality score can be rewarded with cheaper reassurance rates.

More on Individual Protection

Policyholders hiding mental health issues from insurers: Scottish Widows

Policyholders hiding mental health issues from insurers: Scottish Widows

One in five believe disclosing mental health issues will impact on premiums

John Brazier
clock 03 December 2021 • 1 min read
Long Covid levels in UK stabilise during October

Long Covid levels in UK stabilise during October

Currently 1.2 million people self-reporting symptoms

John Brazier
clock 03 December 2021 • 1 min read
Kevin Paterson: The role of non-advised protection

Kevin Paterson: The role of non-advised protection

'In a free market, choice is fair and right as long as the customer understands how and what they are buying.'

Kevin Paterson
clock 02 December 2021 • 2 min read

Highlights

COVER Excellence Awards 2021: All the winners revealed!

COVER Excellence Awards 2021: All the winners revealed!

Leading With Distinction

COVER
clock 03 November 2021 • 2 min read
COVER Excellence Awards 2021: The Night in Pictures

COVER Excellence Awards 2021: The Night in Pictures

A photo gallery from COVER Excellence Awards 2021, held at The Brewery, London, on 2 November.

COVER
clock 03 November 2021 • 1 min read
Gosia Bowling: The role of behavioural science in creating a menopause-friendly workplace

Gosia Bowling: The role of behavioural science in creating a menopause-friendly workplace

'The key to supporting menopausal women is creating a culture in which conversations are welcomed and expected'

Gosia Bowling
clock 02 November 2021 • 6 min read