It is important to note that levels of GP reports have been reduced by a number of insurers over the last few years as we all began to realise that the value of the reports was limited, and that the introduction of new processes like tele-underwriting were more than capable of replacing GP reports for a large number of applications with no reduction in the quality of information disclosed.
A number of insurers now only ask for certain information in some cases, these are called ‘targeted GP reports’ where they want to know more about a certain element of the clients health.
The problem for many IFAs is that many of their clients are high net worth individuals. The sort of clientele who need higher levels of cover. As an industry we continue to have medical underwriting limits based on the size of sum assured, age and smoker status. This means many IFAs still have to put up with the majority of their protection clients incurring delays due to insurers wanting GP reports before acceptance. This gives the adviser the impression that nothing has changed, and most insurers still want to get a GP report.
If we changed the basis that we use for requesting GP reports, we could make sure that we only ask for them when we really need them. Rather than using age, sum assured or smoker status, why can’t we be more scientific with what makes us ask for a GP report? The end of this agreement means we may have to be.
The removal of the agreement between the ABI and BMA means that doctors are now able to set their own charging structure for completing a report for insurers. The obvious threat is that most doctors decide to charge insurers more for this service. The industrys medical underwriting costs could soar if this approach was mirrored across the GP population in the UK. That could increase the costs of cover. Which makes this a threat. We’re still in a recession. The majority of protection purchases are still based (rightly or wrongly) on price. Would consumers buy less protection if prices rose to cover increased underwriting costs?
But… it is also an opportunity. Munich Re did some research a few years ago which reviewed a thousand applications that had been referred for a GP report during the new business process. Eight hundred and fifty of those GP reports had no impact whatsoever on the decision made by the underwriter. That’s 85 per cent of GP reports which could be adding no value.
This makes me wonder if the recent end to this agreement between the ABI and BMA may be the final straw for some chief underwriters. Whilst we can’t do away with GP reports completely, maybe this is the issue that finally means we move to a stage where we only ask for them when we really need them across the whole industry and all client segments?
Andy Milburn is head of marketing for Munich Re UK Life