All the right moves

Advisers have been frustrated by the apparent ivory tower mentality of business protection underwriters ' where direct contact has, in the past, often been discouraged. This has resulted in a Chinese whispers effect which has done little to help the application process, particularly on larger business protection cases. Fortunately, this situation is now consigned to the past with the introduction of several initiatives over the last five years.

One of the most significant of these initiatives is the introduction of underwriting helplines, where the adviser has direct phone access to underwriters. This means that queries can be dealt with immediately. Helplines lift barriers to communication and invite interactive discussion with the underwriter about financial and medical requirements at pre-application stage. This is particularly effective when considering packages of business protection for several individuals such as life, critical illness (CI) and income protection (IP).

The role of the adviser in managing customers' expectations cannot be understated, particularly if the application is for a large or unusual risk. Or where there are medical disclosures that may make it more difficult to place the case. A quick call to the insurer's underwriting helpline will ensure the adviser and customer will know what is required to place the business, or in the rare situation that cover cannot be offered, to make this clear upfront ' saving time and disappointment for the client.

Dedicated large case teams supported by experienced underwriters have also become more common. These underwriters will discuss details of the case directly with the adviser as the application progresses through the underwriting process. Strong working partnerships are developed between the underwriter and the adviser by using hands-on case management. It is also common practice for these underwriters to visit advisers to discuss and support new propositions and ideas.

Financial underwriting is a subject that can cause heated debate, especially as the underwriter could be seen to be questioning the recommendations made by the adviser. Discussion and consideration of the evidence available, rather than the dictation of possible requirements, is clearly the way forward and highlights the flexible approach that most life insurers are adopting. The days of letters going backwards and forwards between underwriters and advisers, debating the merits of the financial viability of an application are gone.

Some companies offer cover note facilities for business covers, allowing risk to be assumed for a period while the underwriting requirements are obtained. This may be full cover, limited to accidental death or with a pre-existing condition exclusion on critical illness. This is particularly useful when dealing with management buy outs or stock market flotations, where the need to move quickly is of the utmost importance.

Stating the case

But does business protection mean lots of medical and financial evidence? Unfortunately, in some instances it does. But insurers are committed to improving their underwriting processes, reducing costs and increasing 'day one' acceptance rates, even on the larger business protection risks.

Routine medical requirements are higher than ever and with the increasing use of cascading medical questioning, more businesses can be accepted with no more than an application.

Financial evidence levels have been rising as well and significant amounts of cover can be obtained without supporting evidence. Traditionally, sums assured for associated applications from more than one individual have been aggregated to decide on financial evidence requirements. This is also changing with much higher aggregated figures being allowed without evidence.

Of course, medical evidence will still be required on the larger business protection applications, but there have been innovations in this area that have helped the process along.

There are several suppliers in the market at present who provide health screening services. For example, a nurse will carry out a simple screening including, blood pressure, urine analysis and weight. Traditionally, supporting medical evidence was a report from the customer's GP and for larger businesses, medical examinations with an independent doctor have been required. Some insurers have taken the decision to use screening as the first medical evidence requirement, replacing the doctors report on clean cases. Others have used the screening to replace some medical examinations.

This normally speeds up the receipt of the evidence and also allows the customer to have the screening at their own convenience, either at home or in a suitable private area at work. This is particularly useful when applications for business cover are received from several key people in the same company, as all the screenings can be arranged at the workplace on the same day.

Some suppliers of health screening services now provide nurses who can take blood, so more of the test requirements on larger business applications can be carried out at the customer's convenience and in one visit. Similar services with doctors travelling to examinations are also available.

Very large applications still require extensive testing such as exercise electrocardiograms and blood profiles and while the requirement for these has been reviewed and reduced considerably, arranging such tests does cause issues for the insurer, the adviser and the customer. There is, however, light at the end of the tunnel, as third-party providers of medical evidence are opening new clinics around the UK to provide a 'one-stop' shop for all medical requirements.

There are many offices in the UK who specialise in business protection and many who are competitive on sub- standard risks. Such offices will have teams of underwriters who are experienced in assessing financial and medical risks. Most will have the support of at least one consulting medical officer ' some offices have considerably more ' who are often eminent consultants with particular medical specialities. These consultants help underwriters keep up to date with the increasing speed in medical advancement.

Riskier applications

Most life offices will also have the support of reassurers who may specialise in certain sub-standard risks. This enables the lead office to offer better terms or to offer cover where they would otherwise decline. This is particularly important for business covers where loans, venture capital or stock market flotations may rely on key person cover being in place. There have also been a few new entrants to the reassurance market in the last year or so, increasing the options available.

This flexible approach to medical evidence helps to encourage discussion and agreement on what is required financially. Financial evidence is often provided to banks or venture capitalists and can simply be passed to the insurer. This again highlights the adviser's role in the underwriting process in discussing the proposition with the underwriters as early as possible, to ensure the necessary supporting evidence is made available. This contact can prevent much unnecessary work for advisers when obtaining accounts, business plans and questionnaires, as they may not be required.

Some insurers are turning to third-party providers of financial evidence instead of relying on the client to provide the relevant information. This can be made available over a secure internet site, so an immediate decision can be made.

And when it comes to placing high levels of cover with one insurer there should not be a problem.

The e-revolution

Aside from more traditional issues, the e-revolution has also had a sizeable impact on underwriting processes. Most insurers have websites in various guises, ranging from simple information and brochure ware, through to extranets that allow quotations, application completion as well as direct submission. Similar functionality is available through third-party portal providers.

Online interactive underwriting is a rec- ent innovation where advisers can get confirmation of the underwriting decision at point of sale. There is limited availability of such systems in the market at present, but this is likely to increase considerably over the next few years, as will online servicing of existing business. With high routine medical limits, more business protection cover could potentially be accepted at the point of sale.

Insurers are also looking at how medical information can be obtained electronically. Although this is in the early stages, it could mark the beginning of an even speedier process.