Four Birds With One Stone*: Solving Major Producer Issues With Teleunderwriting

Hank George, FALU, CLU, FLMI
December, 2007 • Teleunderwrtiting Essay 11

Most arguments advanced in support of embracing teleunderwriting have to do with over- all corporate and underwriting-specific objectives.

We usually don’t think of teleunderwriting in terms of its broad contribution to assuaging the concerns of those who sell our products (thus, giving us a reason for being on the payroll!).

We should.

This essay is a direct result of a survey report summary, published in the November, 2007 issue of Insurance Marketing. This high-quality monthly circulates widely within the North American agent/ broker community.

I wrote an article for them some years ago and in so doing came to appreciate what a superb job Managing Editor Jamie Goland does. Jamie wrote the article about the survey.

The study itself is titled the “2007 BROKERAGE STUDY."

It was done by NAILBA (the National Association of Independent Life Brokerage Agencies), a huge professional association with over 350 member agencies in North America, ultimately representing over 100,000 brokerage producers. I know NAILBA pretty well, having spoken at their annual meeting on a number of occasions and now commencing a technical project on their behalf.

One of the core questions in the survey was phrased as follows:

“What do you find to be the most challenging aspects of selling insurance?”

Those taking the survey were given 15 choices as well as “other.”

The dominant challenge is what I call a “no- brainer.”

No…not getting rich (!)…

…prospecting for new business, which, of course, is what most agents and brokers must do for many years until they build a sufficient client base to thrive on referrals.

Two out of three respondents said that this was their greatest challenge…and there isn’t much we can do about it, is there?

But now things get very interesting indeed from an underwriting perspective because what we do – or don’t do, as the case may be – contributes directly or indirectly to 4 of the next 9 ranked challenges in this survey.

What are these challenges and how does teleunderwriting get us to the “end zone”? (to use American football term for getting the job done!).

2nd Highest Ranked Challenge for Producers: “Getting a product through underwriting to issuance”

If this doesn’t sound familiar, you aren’t an underwriter!

Obviously, there are a number of aspects related to managing this concern, not the least of which is making informed and competitive offers when coverage cannot be approved as applied for.

This, in turn, is enmeshed in company underwriting philosophy, guidelines in your manual(s), agreements with reinsurers and – we hasten to add – whether the underwriter is sufficiently up to speed on the latest developments in the impairment in question to be able to make the best possible offer!

In spite of all the foregoing considerations, however, when producers get into a rant about “getting something through underwriting,” the number one concern we hear is how long it takes.

How many cases wind up in purgatorial orbit while the underwriter tracks down…for the most part…slow medical records, as well as certain other tedious requirements we should be exorcising from risk appraisal?*

*See my essay “Enough is Enough” in the November 17 National Underwriter about the two worst “other” culprits: chest x-rays and treadmill stress tests!

If we are going to solve this longstanding source of friction between underwriters and producers, we will need to direct our energies toward “changing the things we can” and “knowing the difference”!

There is no “magic bullet” destined improve APS (GPR, PMR…) turnaround. We have tried them all and the best answer seems to be using intermediary firms to act as our advocates and actually retrieve these records on site. But even with the best of these services, we are looking at two calendar weeks as often as not (and many straggling in much later).

The only way to change the impact of the APS on slow cycle (application-to-issue) time is to GET FEWER OF THEM.

Which is what teleunderwriting MUST achieve if it is to be worth the expense and time commitment needed to make it happen.

Sure, there are other things we can do – paperless environment, electronic apps, using requirements with faster acquisition times, etc. – but at the proverbial end of the day, as goes the APS, so goes turnaround time…and doubly so the producers’ perceptions of it because insurance agents and brokers tend to have highly selective recall for slow/problem cases and use them as their baseline for assessing our performance!

A decision that can be made based on a teleinterview drilldown in lieu of an APS is a decision made THAT DAY…not 12-16 working days later.

Thus, if “getting the darned thing issued” is their #2 concern, then teleunderwriting affords us the best avenue to showing good faith in trying to get turnaround time reduced.

4th Highest Ranked Challenge for Producers: “Getting products issued for clients with substandard health”

I hear you…you’re saying “hey, this is driven by underwriting practices, not by teleunderwriting”!

And you’re PARTLY correct.

Fact is – except perhaps for heavily-shopped and highly-impaired business (where annuities make more sense half of the time!) – concern with issuing substandard cases is also a function of two other factors:

• The requirements we use to screen risks
• The point at which the underwriter thinks he/she has enough information to act

What determines our screening requirements?

That mix of resources we believe will provide, in aggregate, sufficient protective value relative to our mortality assumptions.

Therefore, if teleunderwriting confers as much protective value as so many insurers have come to appreciate, then it should allow us to do away with onerous requirements that not only slow things down but result in unnecessary adverse actions.

In the U.S. market, the more use we make of Rx profiles, motor vehicle reports, producer-collected oral fluid and, likely soon, producer-collected skin cholesterol specimens, the more risk assessments we can make in less…not more…time, with fewer mistakes resulting from overly-subjective requirements.

In terms of “enough information to act,” wouldn’t (un-coached!) answers to 8 to 14 impairment- specific questions, taken over the phone, be more likely to empower decision-making than the caliber of risk-history information we get now on non- medicals, paramedicals and M.D. exams?

To extend the analogy…what happens when we finally get those “essential” medical records we really didn’t need?

How often does the underwriter unearth some unexpected “discovery” that catalyzes yet another requirement (or two) and/or piling on of debits for what often turn out to be dubious reasons?

I do underwriting audits directed precisely at this issue: jeopardizing good business by wild-goose chases, unnecessary requirements and flawed analysis of unexpected APS “findings.”

All of these undesirables are widespread, with insidious bottom-line implications.

Fact is, I often find that underwriters make many more bad calls in these ways than they do in their assessments of the core elements of the medical history!

One might say that teleunderwriting confers extra value simply because it is NOT awash in myriad risk-irrelevant lab test “abnormalities” and equivocal physical findings…which just happen to be the two main APS-content culprits in this context. Teleunderwriting does indeed play a key role in managing this issue raised by producers.

7th Highest Ranked Challenge for Producers: “Applications are too long/confusing”

Talk about huge direct impact zone for teleunderwriting!

With teleunderwriting, we no longer insist that the producer ask and record answers to the risk related questions…which make up the bulk of the application!

Basically, all they need to do in a full teleunderwriting environment is fill in the information needed to issue the policy and gather any documents, such as replacement forms, mandated by the company or regulatory bodies.

When producers are compelled to handle the risk-related questions, the incidence of both inadvertent and overt nondisclosure soars, relative to teleunderwriting.

They are not professional interviewers!

More to the point, isn’t it inherently illogical to ask someone whose income is determined by the outcome to play a pivotal role in how that outcome is determined?

The only way insurers are going to address this long-standing concern about lengthy and oft- confusing applications is to reduce the amount and complexity of the information the producer is accountable for gathering. Teleunderwriting is the answer here, hands down.

9th Highest Ranked Challenge for Producers : “Lack of Support from Insurance Company Home Office”

There are many factors contributing to this prevalent complaint. They arise in every operational unit, of which underwriting/new business is just one.

On our end, support means streamlining the flow of business and taking as many “monkeys” off the backs of producers as possible.

One thing that stands out prominently here is incomplete applications. In many companies, they continue to be a nagging obstacle to getting business issued.

With teleunderwriting, there are no incompletes in the risk-related portion of the application… because the teleinterviewer must ask and answer each question before moving on to the next.

How often do you find an impairment flagged with a check mark in the box adjacent to, say, question #14…

…but no elaboration on that check mark in the pathetically tiny area at the bottom of the medical history page where we expect the producer to scrunch in the answers to five or six questions about when it happened, tests done, treatments given, doctor/hospital contact information…and what all?

Of all the enhancements we can make in our domain of insurance operations, none goes further in providing meaningful support for producers than teleunderwriting.

How can you – as chief underwriter – get mileage out of these revelations?

By making sure senior management and the key people in Sales and Marketing understand why they should be lining up to support – as circumstances dictate – either installation of teleunderwriting, or, its broadened deployment to encompass all (at least) fully-underwritten business.

Second, by tooting your own horn to the producers every chance you get…in publications, during producer schools, at sales conferences and even those “spare-no-expense” reward outings!

"How unfortunate it would be if – after investing so much time and effort – you did not get the accolades you deserve for having brought to bear so dramatic an impact on 4 of the top 9 challenges producers face every day!"

Jamie Goland
2007 Brokerage Study
Insurance Marketing
November, 2007:22

* No, we don’t advocate throwing stones – or baseballs, for that matter – at birds! We paraphrased “kill two birds with one stone” solely for effect.

DISCLAIMER
This essay was written for informational purposes only. Hank George and Hank George, Inc. do not recommend or endorse any specific business practice or procedure discussed herein. All business considerations concerning matters covered herein should undergo proper and sufficient scrutiny by appropriate management personnel of the companies involved prior to implementation on any basis. © 2009-10 Hank George, Inc.