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Tom Baigrie on protection

How many times have you had to make a call or arrange a new meeting with a client to tell them of an unexpected loading, exclusion or decline? The way to avoid it is to set their expectations properly at outset you have to know quite a lot about underwriting.

Last week, I had the opportunity to address many of the great and the good of the underwriting world, particularly those providers and consultants who are clear that the best way to drive costs down and profits up in a premium-driven world is by point of sale underwriting (Posu). My contention was that a good protection adviser needs to take into account underwriting stances before choosing a provider and quoting a premium if we are to act as agents of the client, which regulation will shortly ensure we do.

For me, Posu just after the sale simply speeds up an already flawed process. That is a good thing, but better still is if it means just before the sale. Then the adviser is doing their job and the provider is receiving the props they want, which stay where they want them to stay – on the books.

Providers dread “selection against” and may fear advisers who get too clever. Our solution is to allow them to audit recorded calls and to ask them not just to pay us on volume but also on the profitability of our cases to them. That offers them a real chance to cut reinsurance costs on advised business.

All those easy, clean props that make up the bedrock of an IFA’s market share will make up an ever-smaller share of that bedrock and an ever-bigger share of those who can sell off the shelf.

A key part of your core profit, like mine, will come from those for whom life cover in a tin does not fit. And they tend to be a tad older, a little better off and often need a bit of underwriting before ending up a good profitmaking case for you and the provider. But there is no point sending them to the wrong provider for their condition or occupation or hobby, so you’ll have to learn pre-underwriting.

This has led me to call on providers to change their focus from outsourcing underwriting to tele-underwriters to investing in getting distributors sending them the props they want in a clean and fully completed fashion. Intriguingly many do see the point in moving underwriting to the ‘front office’ and, provided you let them audit and record calls, trusting you to do their job, and then paying you for that bit too.

Tom Baigrie is managing director of Lifesearch

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