Despite the praise bestowed upon tele-underwriting by advisers and insurance companies over the past year, there remain concerns that require addressing to improve the process’s evolution.Direct Life & Pensions sales and marketing director Richard Verdin, for one, believes tele-underwriting is the way forward. “What is driving it is the increasingly intense and intrusive questions that are being demanded by the reinsurers of the insurers to refine their pricing to the nth degree. I cannot imagine that within five years there is going to be much business that does not have some form of tele-underwriting on it,” he says. Direct Life has been tele-underwriting for about two-and-a-half years and, says Verdin, his firm was one of the first to adopt this approach. They are currently underwriting about 2,000 proposals a month, which Verdin says makes them the largest tele-underwriter in the UK. He believes tele-underwriting will “cure all the ills” of the protection sales process, adding: “Once the ambulance-chasers have finished with endowments, they are definitely going to turn their attention to critical illness. Without doubt, because non-disclosure in such high proportions is causing such significant financial stress to so many customers now, that it is a big opportunity. There are a whole lot of problems that are brewing that tele-underwriting and tele-data capture will solve.” Currently, Verdin says, up to 25 per cent of claims are being declined, with typically 50 or 60 per cent of those as a result of non-disclosure at the application stage. He says tele-underwriting will reduce this. Verdin is calling for insurers to recognise that, while they will be able to provide some of the tele-underwriting services themselves, to offer a truly consistent service across the market they will have to deal with an aggregator such as Direct Life. “Tele-underwriting may be good when business is a bit quiet but when they are getting lots of business, because they have now got far more human intervention involved, it is difficult for them to cope with,” he says. But Chadborn Baker & Kearle principal Peter Chadborn is not convinced the Direct Life model is the best way forward, describing it as “another mouth to feed”. “Margins are being squeezed anyway so you have either got to put clients’ fees on top, or something like that, which is not going to be favourable,” he says. Despite Chadborn’s reservations over an aggregator, he is a fan of tele-underwriting. He says: “Wherever possible, if we can use one of those insurance companies that use tele-underwriting, then we will, because you know that the underwriters are going to ring up and have a conversation with the client. It just removes a whole raft of possible non-disclosure. Without doubt, we would favour these insurers over others.” Chadborn says he is surprised that relatively few insurers have adopted tele-underwriting, citing Royal Liver, Axa and Prudential as three of the insurers with a tele-underwriting process in place. He also thinks a lot of IFAs are “blissfully” unaware of the potential problems of non-disclosure and doubts many know they could be liable to pay for claims – two issues that make him all the more in favour of taped conversations. RGA head of sales and marketing Jason Hurley believes the model that Direct Life uses, whereby everyone is questioned whether they are clean cases or not, is likely to become more widely accepted in the market. He thinks the industry has some way to go in the development of the call centres and in refining the questions asked. One weakness in the current system, he says, is the potential failure of insurance companies to retrieve tapes of the phone conversation. “If you actually ask them to go and find policy num-ber 48362, in practice the quality of the recording is not going to be as good as it could be and also it is often very difficult to get hold of the phone calls – particularly if there are two or three calls on a specific policy,” Hurley says. There is a slight danger, he thinks, that staff might miss things over the telephone that a doctor would pick up. He says it is a skill, which to some extent is unknown to all of us – knowing which illnesses are better off with a doctor’s report and which illnesses are more suited to a phone conversation. He says: “I think it does need more work and I think as an industry we recognise that this work needs to be done.” Looking to the future, Hurley adds: “From my point of view, as the reinsurer, the fact that the phone conversation is taped is a huge benefit. RGA have been doing this in the US for years and it is now at the point where the distributors, the IFAs are asking for it and want it. I think we are going to follow.” Prudential has been offering tele-underwriting services for just over a year, and head of protection at the group Paul Cowman agrees there have been more disclosures over the telephone but thinks this could be in part to the way the industry is shaping up. He says with cases that are clean, an IFA will often opt for an online application so as to get an immediate acceptance. But in cases where an IFA thinks there might be some level of underwriting needed, they often favour tele-underwriting as a more convenient method.