The Underwriting Toll Of Stress Burnout can be associated with medical problems of concern to underwriters
By Linda Koco
When a person gets burned out on a job, project or situation, thats not a major concern for personal insurance underwriters, say many observers.
The common thinking is, the person goes home, takes a few days off and presto, good as new. Theyre insurable.
But not always, caution impaired risk experts. Burnout is a lay term for stress-related illness that can lead to or be associated with medical problems of nagging concern to insurance underwriters. These conditions range from weight gain and related diabetes to harmful weight loss, high blood pressure, depression or other emotional disturbance, broken sleep and many others.
Hence, insurance and financial advisors should take a second look when a client sighs and says, “Am I ever burned out.”
“We dont see burnout on the life insurance applications that come in here, but we do see a lot of people are taking Prozac and other mood elevating medications,” says Kevin Merz, president of The Merz Agency Inc., Portland Ore., and chairman-elect of the National Association of Independent Life Brokerage Agencies.
Since the recession in the early 2000s, “many employees work longer hours, lack suitable rest and exercise, and show signs of stress like smoking, overweight, emotional disorders and coronary artery disease,” agrees Samuel Marotta, underwriting advocate at the Herman Agency Inc., an Oak Brook, Ill., brokerage general agency.
“Most are insurable, and a standard rating is not out of the question,” he adds. “But the key is to determine to what degree the problems are impairing the applicants life expectancy.”
If a person has diabetes but is taking medication and has his or her diet under control, for example, that looks a lot better to a life underwriter than someone with the same condition but who is not following the physicians treatment plan, says Marotta.
In disability income insurance, “we see a lot of stress and job-related burnout,” agrees Larry Schneider, principal, Disability Insurance Resource Center, Albuquerque, N.M. “In fact, 30% of all DI claims submitted are related to this. Thats pretty high.”
This area is subjective, so some DI claims are denied when there is no basis found, he adds. Still, the trend shows that job stress is a problem, and its visible in DI applications, too.
If the client has situational stresssay, the persons mother diedbut the episode is brief and the person now has gone on with normal life, the stress may not be critical, Schneider says. “But job burnout is not usually situational, and it could go on for a prolonged period. In that case, its a red flag to the insurance company if the person puts in an application for DI insurance while experiencing this type of stress.”
Such stress can bring up difficult questions, he points out. For example, did the person have the auto accident because he/she started crying while driving the car or just because the road conditions suddenly worsened?
In general, Schneider says, “it is difficult for DI underwriters to exclude the ramifications of stress from coverage.” Therefore, he says, the tendency is to deny applications where severe stress is involved rather than write them. But if medical records support the argument that the applicant had an episode of situational stress, some insurers will accept, according to Schneider.
On the life insurance side, underwriters will notice burnout in an applicants medical records, says Dr. David Williams, the medical director at Ohio National Life Insurance Company, Cincinnati, perhaps in weight gain or use of antidepressants.
However, Williams continues, “underwriters know that everyday life can be stressful, the economy has been rough, and that people now embrace pharmaceutical treatment for things.”
This is so common today that it “doesnt weigh very heavily” for life insurance, unless there are also hospitalizations, alcohol or drug abuse, significant financial or legal issues or other serious aspects, he adds.
Sometimes, the underwriter might postpone the application and wait for things to settle down, he says, but if the applicant cant postpone, due to a business matter, for instance, then the underwriter decides on a case by case basis. If, say, the person is functional and handling the condition well, it may not be an issue. “But if the person is not handling it well or is decompensating, the application might be rejected.”
In DI insurance, Williams adds, the risk is morbidity, not mortality, and the cases are harder to adjudicate, so the underwriting tends to be more conservative. For instance, the underwriter might reject or postpone a case where the condition is recurrent or prolonged or involves multiple hospitalizations.
When working with burnout cases, the agents job is not to try to be the clients psychiatrist, stresses Schneider. Rather, the agents job is to report all significant information to the insurance company. To do the best job in this area, Schneider and many other brokers urge agents to attach a cover letter to the application detailing factors likely to impact on the underwriting decision.
Merz, the BGA from Portland, Ore., suggests that agents do field underwriting first. This process entails asking the client some key questions such as: Are you taking medication? Why? If its for stress, what was the causedeath of a loved one? Loss of a job? Other event? What are you doing about the stress? (See box.)
Term life insurance applications today rarely ask medical questions, Merz points out, noting this is a change from up to 3-4 years ago when many apps still included some medical questions. Now, for face amounts of $100,000 and up, the trend is for home office underwriters to obtain client medical information from the paramedic exam and the attending physician statement (APS), he says.
Still, Merz says, agents can save themselves and their clients a lot of trouble if they do the field underwriting. Not knowing significant information can “blindside” the agent, he explains, and it can cause a lot of work for everyone if the app comes back rated or declined.
Clients generally dont volunteer negative information, especially if the condition has stigma attached to it, Merz concedes. Therefore, the agent should impress upon the client how important it is to be straightforward. Getting accurate information helps develop realistic illustrations and quotes, and also appropriate client expectations, he says.
Any information the agent can provide can be helpful to the underwriter, says one insurance company executive. But, he adds, field underwriting information is not as significant as the medical recordthe blood work, the physical, and so on. Where field underwriting does help is in identifying the coverages likely price, he says, adding “its better to offer that than quote a rate the client could never get.”
A lot of people today are experiencing stress because of long hours, changing jobs or starting a new business, especially in the wake of corporate downsizing and outsourcing, notes Marotta. The agent needs to determine what is the reasonable level of outcome, based on the persons age, health and other circumstances. Then, tell the underwriter what the client is bringing to the table other than stress.
Reproduced from National Underwriter Edition, November 11, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.