Note: This is the fifth article in a series of 12 discussing the benefits of using the Laser Underwriting Approach, which utilizes an agency-based staff underwriter. Each story in the series addresses one of the 10 preliminary questions that make this approach effective.
The Laser Underwriter Approach yields accurate quotes and keeps the processes smooth by asking these 10 key questions:
1. What is your client’s medical history, including conditions, treatments, or medications?
2. What is the amount of the application?
3. What is your client’s age, tobacco status, height, weight, and ability to live on his or her own?
4. Are you in competition? What are the other companies, face amounts, and ratings?
5. Do you have related applications with other companies, such as rolling over a policy or a 1035 exchange?
6. Will your client accept an increased premium?
7. Are there any avocation, financial, aviation, or legal concerns?
8. Is the amount of coverage appropriate for the client’s financial situation?
9. Are there any sensitive histories such as alcohol, drug, or motor vehicle problems?
10. What is the importance of this client to you, such as being a center of influence which could provide referrals?
So far in our series discussing the Laser Underwriting Approach for trial applications, we’ve completed our application and sent it to an Insurance Marketing Organization (IMO) staff underwriter to review. Now the fourth question in our series of top 10 questions is asked: Are you in competition with anyone else for the case, and with what other companies? Have face amounts been applied for, which would comprise the total being placed? As part of that question, the underwriter will also want to know the total amount being placed, and if ratings have already been given. This approach will help with speed and accuracy for a quote on a higher risk case because the staff underwriter will keep the possibility of a competing company in mind while assessing the risk.
The staff underwriter who first reviews your client’s application will know to ask this question. With life companies merging and trimming products, a higher percentage of your business is at risk to be replaced by other life insurance entities. There also is competition for new business by brokers, especially for large cases. Insurance professionals who stay on top of their business will keep track of these possible situations. The Laser Underwriting Approach to trial applications can keep you ahead of the competition when it comes to placing these cases.
So, what companies are in competition for your client’s business? The staff underwriter you work with is aware of the ever-changing strengths and cutting edge guidelines a life insurance company has within their underwriting guidelines. For example, one company may be strong in circulatory issues like heart and stroke problems, while another company may have new information and underwriting for applicants with cancer. Research is ongoing and actuarial studies are constantly looking for new ways to “compete” in the life market.
What amounts have been applied for? The staff underwriter keeps a running log of what different companies need for their requirements on age of the applicant and amount of the application. Although most companies have similar requirements, there may be one or two competitive life companies that may relax medical and financial requirements for a given amount of time to get business in the door. The face amount is key for financial justification. The staff underwriter is aware of companies’ financial and medical guidelines and can assist with the necessary cover memo. This can help you stay up-to-date on the information.
Have there been ratings already given? This is important information for the underwriter you’ve been working with to know. Once they are aware of a rating that has been offered by a competing company and a competing broker, the underwriter will be able to put the information together to know how and why a particular offer was given. For example, Company X may have a “Table Shave Program,” which allows an applicant with a Table C risk to be considered at Standard rates. The underwriter then knows what they are dealing with, and where else they can go to get a competitive offer.
Another example may be that the staff underwriter knows the client has a Table F already offered, and, by using their relationship with underwriters from other companies, can work to bring that offer down to a Table D. This may not always be the case, but by knowing the competing company, the amount applied for and the rate already offered, the staff underwriter has an educated background to work with.
Next we’ll discuss question number five in our series: Do you have related applications with another company, such as rolling over a policy or a 1035 exchange? We’ll go over the importance of this question in our article next month.
Bob Pedigo, CLU, FALU, FLMI, heads the underwriting division at Davis Life Brokerage. Mr. Pedigo is the former Vice President and Chief Underwriter with Indianapolis Life. As the Vice President of Underwriting for Davis Life, he assists producers in navigating their cases through the sometimes rocky sea of underwriting. In addition to being available for consultation with agents on tough cases, he is an advocate in working with home office underwriting departments. In addition to his 30 years of underwriting experience, Bob also sold life insurance early in his career.