I have just been through the annual pain of getting my car insurance reviewed and renewed and I looked on the aggregator sites to get an indication of costs and buy a policy. What struck me in relation to our business was the fundamental difference in the underwriting.
Having filled in the very detailed initial forms, I was able to get a guaranteed price. I bought the policy that satisfied my needs and I was able to download and store my policy document. What I liked about it was the lack of delays, having filled in all my information.
If I was not satisfied, I had the choice to replicate this on a number of online sites or indeed approach a broker if I thought the whole process was too complicated. In our own industry, despite developments in products and some advances in online processing, we still create client confusion and huge delays because of the costly process of underwriting.
I have worked with lots of good underwriters and I understand their comments that it is an art, not a science. There are lots of ways to interpret the complex information and that financial evidence for bigger cases can add yet another layer of complexity but I do not understand why no provider has tackled this problem.
There will always be medical advancements, which could have an impact, particularly for critical illness, and it is imperative to have adequate R&D in providers or reinsurers to ensure risks are underwritten correctly. But if I return to the premise that most underwriters learn from a set of rules and that the rules can be automated, then why aren’t we seeing a more radical approach to underwriting?
To get to the point of this article, I do not want to have a “pipeline” on December 22 when the gender directive becomes operational. I want all my customers to be able to get the life insurance they applied for before this date at the rates they applied for.
However, the current processes, for a lot of people, do not allow this. To get life, critical-illness and income protection quotes is easy – a few simple details and a premium is generated. Over the past few years, we have seen a steady increase in people who have not gone on risk with the initial premium quoted, which as a TCF measure is ot good for our industry.
So, in the future, do I think we will see a change in the process for the mass market? Yes. I think we are going to see three routes to market – simple products, possibly with mora toriums, fully underwritten products at the point of sale and for the very complex cases, a process which looks like our current approach. For the mass market, completing a more detailed quote request form will drive the actual cost of the insurance and the ability to go on risk immediately – and fewer pipeline problems for us to manage.
Neil McCarthy is sales and marketing director at Direct Life & Pension Services