Advisors today are faced with the immense challenge of assessing a client’s risk class in an underwriting environment that seems to change every week. Just staying on top of which companies are better at underwriting prostate cancer, diabetes, overweight applicants or those with heart disease is an impossible task.
As an advisor, the best you can hope for is to be armed with the correct field underwriting tools that will allow you to answer the home office underwriter’s questions before they are asked. It is these tools that can give you a good idea of how your clients will be assessed.
As field underwriter, you are not only the first point of contact with the applicant but, more importantly, you are the one who sets the bar of expectation for what the client can anticipate paying for the applied coverage. To be sure, this is a huge responsibility, but it’s also one that can make or break whether the policy gets placed and a commission gets earned.
Most advisors are reluctant to ask a lot of questions during the application/interview process, especially when they know the client will be undergoing a medical exam and the examiner will be asking the medical history questions anyway. However, the underwriting process can be shortened significantly if the advisor gathers up front the information regarding doctors the client has seen, the reason for the visits and the dates of service. This will enable the medical records to be ordered when the application is received, rather than waiting possibly two or more weeks for the medical exam to be completed, which typically provides these details.
Asking for this information will also give you a feel for any medical issues an applicant may have. If you are just conducting a fact-finding interview, this would be the time and place to have the client complete impairment-specific questionnaires, which help determine a client’s potential risk class.
The forms are readily available from insurance carriers or general agents. It would be useful to keep a few questionnaires of the more common impairments on hand for point-of-sale meetings. Providing a completed form to an agency can help them identify the best carrier for your client, saving everyone time and effort as well as increasing the odds of placing coverage in force.
The changing face of risk assessment
Those who have been in the business a few years have seen changes not only in products and rates but also in the information insurance companies use to assess risks. Much of this is due to the competitive pricing of today’s products.
When companies announce lower rates, these lower rates are often accompanied by changes in the underwriting guidelines. Lower rates can mean a higher bar to qualify for the risk class. Build charts, blood pressure and cholesterol values, level/type of tobacco use and family history are areas that seem to undergo the most change.
Years ago, an applicant’s family history was hardly a factor in the underwriting decision. Today, an early death of a parent or sibling due to heart disease or cancer can adversely impact the underwriting class offered. Agents and clients have a difficult time understanding why an applicant in “perfect” health can’t get the top underwriting class when family history is a problem. Addressing this at the point of sale can avoid a potential problem when the underwriting process nears the finish line.
Tobacco use can play a large part in the determination of which company to propose coverage for your client. While many carriers consider smoker rates for any form of tobacco use, there are a few companies that will look at non-cigarette tobacco users as nonsmokers. The real gray area comes when applicants are cigar users, because the smoker/nonsmoker distinction is determined by how many cigars are smoked per week or month and whether or not the lab specimen will come back positive for nicotine use.
To further complicate matters for the field underwriter, the introduction of electronic cigarettes adds another variable to the tobacco definition. When an applicant responds positive to the tobacco use question but does not smoke cigarettes, advisors really have to drill down on the type and frequency to find the best company match.
How to be a good field underwriter
Recently, one insurance carrier announced it was doing away with all paramed exams when a tele-app was submitted. While this might be convenient for a proposed insured and shortens the application paperwork for an agent, it takes the field underwriting out of the agent’s hands and leaves it up to a phone call from a company representative. Could this be a trend? Will more companies get on board with it? Here’s the question: do agents really want to hand this control over to the insurance company?
There are other questions a good field underwriter needs to ask on every sales appointment, even though no two interviews will be alike. You can ask those questions upfront or you can ask a different set of questions later on, once the application is submitted.
What you don’t want to be is the advisor who asks questions like these:
- Why did my client not get the best rate class?
- Can you find a company that will treat my tobacco chewer as a nonsmoker?
- Can you reissue the policy for a lower benefit or a different product type because I can’t place the policy as it was approved?
- I didn’t know my client would be rated. What do I do now?
Good field underwriters prepare their clients for realistic outcomes and do all they can to minimize the processing time to get a policy issued that can be delivered. They tend to have less back-and-forth interaction with clients to get additional details or clarification on their applications. By not over-promising on what they can deliver, these advisors tend to place a higher percentage of their applications.
Time can be the enemy of any insurance application, and the longer the process goes, the lower the likelihood that the policy will be placed. That brings to mind one final question: “If you don’t have time to do it right, when will you have time to do it again?”
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