Tele-underwriting has recently become a buzzword in the protection market. Will the service take off and who is likely to reap the most benefits?
Market views
Kevin Carr, LifeSearch
Tele-underwriting means different things to different people. To some, it is asking a client the standard questions that appear on a paper application form over the phone.
To others, it is about using experienced underwriters to gain further information from the client over the telephone – underwriting information that would otherwise have been obtained through a medical examination or doctor's report, which are costly and not always that helpful.
Therefore, the concept of tele-underwriting is aimed at driving down life office's costs while obtaining the same, if not better, background information by allowing the customer to speak to a trained professional about his/her specific underwriting issues.
However, the long-term flaw perhaps, is that underwriting should form part of the adviser's recommendation process, which could see tele-underwriting causing additional and unnecessary duplication.
Tele-underwriting may make the process easier upfront for the adviser who does not specialise in protection, but that will be little consolation when the shock of the unexpected – and harsh – underwriting decision is made and their client decides not to buy, which is often the case when the impact of the potential/likely underwriting decision is not discussed upfront.
Peter Hamilton, Friends Provident
In one form or another, tele-underwriting is likely to grow in a variety of guises over the coming months and years. At the heart is the collection of information from a customer over the phone. This may cover almost the whole process, with full capture of all relevant data, or it may be limited to specific aspects of risk assessment.
The person making the call may be a trained underwriter, someone with medical training, a customer service operative working within a life office, a distributor or third party. The information could be used to help underwriters make informed decisions or be entered into an online system for an immediate decision.
The potential benefits are widespread, and it offers a way of doing business that will make life easier for the customer and distributor with quicker decisions and shorter processing times.
It should generate better disclosure and better management information, which will please the insurer and reassurer, and it should reduce the need for GP reports, which should please everyone.
Whoever makes the call, there is a need for robust recording technology, training and a process that maximises the chances of catching the customer at an appropriate time. If the life office is making the calls, it needs to convince the distributor that it will in no way undermine the customer relationship. But these are barriers that can be overcome and overall the industry should see more companies putting their life on the line.
Paul Bennett, AXA
From the adviser's point of view, not having to go through detailed medical information with a client saves discomfort and time. It speeds up the interview and enables the adviser to see more clients. There is less form-filling and there should be less subsequent chasing of missing medical evidence. The end result should be that the client gets onto the books more quickly, helping an adviser to improve their cash flow.
There are also advantages for the customer who will, in most cases, probably prefer to go through their personal medical history with a trained tele-underwriter over the phone, rather than face-to-face with an adviser. The level of disclosure that tele-underwriting is designed to produce also means that the customer is likely to have a better claims experience.
For the protection provider, the level of detail obtained from customers should lead to improved consistency and accuracy of data. With all calls being recorded, there is also a full audit trail of exactly what information was disclosed. And getting business onto the books faster is in the provider's interest, every bit as much as it is in the interest of the adviser and the customer.
Peter Chadborn, Chadborn Baker & Kearle
Tele-underwriting has been a breath of fresh air for the protection industry, particularly for those writing the business. The last few years have seen service levels fall, predominantly within the big life offices, and one of the first standards to deteriorate has been the processing of protection business.
The onus for ensuring efficient processing has fallen squarely on the shoulders of the IFA and unless their practice has the ability to cope with the extra workload, the turnaround time from application to acceptance will have increased from an average of two to four to eight weeks or more.
Therefore, anything that reduces the turnaround time and workload for the IFA practice is very welcome indeed. Tele-underwriting has done just that.
Our experience with Royal Liver's Progressive underwriting has so far, seen the turnaround times return to previous levels, primarily due to the lack of requirement for an automatic GPR and a telephone call from the underwriter directly to the client.
The IFA industry is likely to be the sector to reap the most benefits. Not only due to the ability to get clients on-risk faster, but also with regards to underwriting accuracy.
Any health information that is relayed directly from the client to the underwriter eradicates the possibility of data inputting error or misinterpretation. The likelihood of such inaccuracies can occur when discussing or recording the specifics of a client's health problem, which is exactly why the tele-underwriting service should be utilised.
