Report of a Brand New Teleunderwriting Survey
Hank George, FALU, CLU, FLMI
November, 2007 • Teleunderwrtiting Essay 10
Characteristics of Survey Respondents' Companies
We have just completed a survey of 18 American life companies currently engaged in teleunderwriting. The findings should be of interest to all life and health insurers using or considering teleunderwriting. Therefore, this essay will review the results of that survey, with added commentary…as readers have no doubt come to expect from this underwriter!
Using broad parameters, 9 are classed as “large,” 8 as “medium” and 1 as “small” in terms of volume of business written.
Ten are located in Midwestern states, 4 in the West, 3 in the East and 1 in the South.
40% began teleunderwriting prior to 2000 AD, whereas 22% commenced between 2000 and the end of 2002, and the remaining 38% in 2003 or later. All of have been teleunderwriting for at least two years.
What was the #1 reason your company started using teleunderwriting?
I would have thought the 4 options presented as choices would have accounted for most answers.
They did not.
Of the four optional answers offered (vs. “other” – with comment if desired), “lowering acquisition costs” was the most common response (4 of 9), followed by 3 who ticked “reduce application-to- issue” turnaround time and just 1 of the 9 choosing “to be competitive with others already doing teleunderwriting.”
Not one respondent indicated that their prime mover was “to reduce medical record ordering”…a noble argument for teleunderwriting by any reckonging!
Off the 9 ticking “other,” 3 cite simplifying the application process, 2 indicate making applying less cumbersome for customers and 1 says the same for sales persons (agents, producers, intermediaries). The 3 other answers are: to support a rules-based engine, to improve quality of underwriting information and to improve mortality experience (which, in point of fact, competent teleunderwriting truly should!).
Who can disagree with any of these reasons?
On which business is teleunderwriting used?
89% deploy teleunderwriting on all fully- underwritten business. 83% do teleinterviews at all face amounts and 94% use them at all ages.
These answers are reassuring, given that it makes no sense whatsoever to NOT use teleunderwriting on all applications taken on all adults.
Are your teleinterviews undertaken in-house or completed by outsourced service providers?
50% outsource entirely, 33% do all interviews with company staff and 3 of the 18 firms use both vendor-provided and internal callers.
It is widely said that the % of companies outsourcing teleintrviews is higher than reflected here. Part of the reason for these results, therefore, may be the relative size of respondents, as large carriers likely have a greater probability of having corporate call centers.
In earlier surveys, small-to-medium sized companies were more likely to avail themselves of outsourcing than large insurers.
Where did you get your drilldown questionnaires?
2 out of every 3 respondents designed them in- house, with or without outside expert assistance. Only a third depend solely on questionnaires given to them by outsourcing providers.
As 12 of 18 outsource some or all calls, only half of those with likely access to free questionnaires from service firms choose to avail themselves of same.
Do your teleinterview callers ever go “off-script”?
44% said that they do indeed provide for their callers going beyond strictly scripted interviewing, which is a higher % than one would have thought (at least in the USA).
It has become increasingly clear of late – based on teleunderwriting audits and other undertakings of mine – that the “script-only” approach could seriously undermine one’s potential yield from teleinterviewing.
Fact is, it may be an insidious factor leading to ordering as many – if not more – medical reports in a teleunderwriting environment as one did in the past, with traditional underwriting!
Don’t be surprised if we see a groundswell of interest in adding this dimension to teleinterviews in the future (which, of course, could have significant implications for at least some outsourced providers).
How would you rate the capacity of your teleinterviewers to get satisfactory information regarding Rx use by applicants?
Most (72%) chose “good” as opposed to “great” (22%) or “poor” (6%).
One carrier provides a prep sheet for customers scheduled for teleinterviews, thus preparing them for the experience and including guidance specifically related to fully answering questions about medication.
Another makes a brochure covering this key subject, among others, for sales people to give to customers prior to the interview. With any luck, more than a few make their way to the interviewee!
Hats off to both insurers for taking an important step to maximizing disclosure of not only essential Rx details but also improving the overall caliber of interview content! You may wish to give consideration to doing likewise…small investment for a potentially major pay-off.
How has teleinterviewing impacted your turnaround time?
38% said things are better, 22% “about the same” and the remaining 38% indicated things are not as good as they had been before.
Undoubtedly, those whose experience has been unfavorable are mainly among those deploying teleinterviewing for a comparatively shorter time than the rest. Over the years, many insurers have reported an transient period of app-to-issue time problems early on in their teleunderwriting program.
Two companies with unfavorable results in this regard indicated that the culprit is delayed paramedical ordering.
How has teleunderwriting impacted your medical record ordering?
Here the impact of teleunderwriting has been, as expected, mainly good news, with 78% now ordering fewer reports, 11% roughly the same number and only 2 of 18 experiencing an increase in the % of cases on which underwriters pursue doctor/hospital records.
One respondent commented that his company has been chastised on “every audit” by reinsurers who would have had them order more medical reports than what they were getting with teleunderwriting.
One of the 2 firms now ordering more reports took a positive perspective, believing the net effect – pinpointing cases where reports are truly needed which might have been overlooked in the past – will have favorable mortality implications.
Do you audit your teleinterviewing and, if so, how often?
Only 72% owned up to doing such audits (how do the others maintain their peace of mind?).
Those who do so tend, for the most part (62%), to do these audits more than quarterly (as they should, considering what is at stake).
Are you satisfied with the quantity and quality of teleinterview-obtained risk information?
Over half are “very” happy, whereas 2 of 18 are anything but pleased. Two companies report some deterioration in quality in the past year; by contextual inference, both outsource their calls.
One commented that training of outsourcer callers did not seem to be keeping pace, attributing this to the likelihood of steeply-rising volumes of business coming to their service provider.
Time to invoke the teleunderwriting mantra: “garbage in, garbage out”…
…because over the years, there has been plenty of credible “circumstantial” evidence suggesting interviewer training may not be all it is often said to be, especially as regards medical aspects (rather than non-specific calling skills).
This could have major ramifications if more and more insurers want callers who can go “off-script” as needed to fill in the “blanks,” so to speak.
Are you satisfied with your underwriters’ capacity to make decisions based on teleinterview content?
50% are “very” pleased, 22% “somewhat” satisfied and the remainder not one bit happy in this regard.
Do you feel your underwriters should be making more decisions from teleinterviews, without resorting to medical records?
Half say their underwriters should be making significantly more decisions from interview/ drilldown content…
…and when I asked those 9 companies what factors they feel are contributing to problems in this regard, 3 were cited:
- Quality and quantity of interview information
- Reluctance to change old habits
- Difficulty equating interview information to manual guidelines
All 3 can be remedied, of course.
One wonders if the issue of “reluctance” might not be due, at least in part, to how underwriters are audited internally.
If audits are done by the most veteran underwriters…and if the most veteran underwriters are often (and they are) among those most resistant to changing ingrained bad habits and misperceptions…then, perhaps the “failure” of underwriters to change their old habits is a well- justified defense against (inappropriate) audit discrimination.
Do we need to wake up and see that the veteran underwriters do not necessarily make the best auditors?
This is most likely true, of course, where obsolete information inexorably calcifies in the atrophic databases of underwriters who are long on service…but short on continuing ed!
The last bullet point here is so important that we covered it already as the “teleunderwriting disconnect.”
Subsequent to writing that essay, I have been raising this question with more insurers, who, in turn, have consistently acknowledged its veracity.
Hopefully with the completion of our teleunderwriting paradigm project in 2008, insurers will have the resource needed to bridge this disconnect and thus greatly maximize the capacity of their underwriters to make decisions without ordering those medical records they don’t really need.
Since the advent of your teleunderwriting program, have you changed your age/amount requirements and, if yes, have you liberalized them?
Half of respondents have changed their requirements; 78% of those having made liberalizations in the process.
Undoubtedly the bounty of protective information from teleinterviews has been a prime mover in making such progress possible.
What has been your underwriters’ reaction to teleunderwriting?
50% say their underwriters “love” teleunderwriting, 44% conclude that they merely “tolerate” it and one lone respondent takes a negative (“hate it”) tack.
Of course, chief underwriters can have a huge impact on how their staff responds to teleunderwriting…that is, if they chose to (and if they don’t bother, what does that say for them?).
Has teleunderwriting had any impact on the cost of your reinsurance?
With one exception (“it reduced the cost”), all answered “no.”
What has been the response of your sales force to teleunderwriting?
One in three say “they love it” while the remainder report tolerance. Instructively, not a single respondent chose the “they hate it” option.
So much for that myth.
Do you allow your sales folks to choose between teleunderwriting vs. conventional underwriting on the business they submit?
Predictably – and, sadly – 2 out of 3 permit producer-mediated antiselection.
When I asked those who allow this if they intend to see the light and go over to “mandatory teleunderwriting” down the road, only 1 in 3 confess this intention.
In other words, 8 out of 18 intend to facilitate avoidable antiselection indefinitely.
The “tail” waggeth the canine evermore.
How has senior management reacted to teleunderwriting?
Not to imply, of course, that senior management is by its nature (necessarily) reactionary, of course!
That said, 100% of respondents say the folks up the corporate food chain “love it” and no doubt all 18 survey-completers are pleased (or, at the very least, relieved) that this is so!
Lastly, if you had it to do over again, would you adopt teleunderwriting?
All but 2 said yes… ….and one negative response is hereby discounted due to my awareness of its pathogenesis! Several appended comments, best summarized by, in the words of one, “teleunderwriting is THE WAY TO GO!”
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.
