Thinking Your Way Through Teleunderwriting

Hank George, FALU, CLU, FLMI
May, 2007 • Teleunderwrtiting Essay 4

 

I have decided to scrap the topic for July: Demythologizing the Three W’s of Teleunderwriting, and incorporate that message in this essay.

Accordingly, I have added a new essay topic, moving the others up one month and then inserting the new topic for November.

The new topic is Risk Screening in the Age of Teleunderwriting.

Why this?

Because of what I saw on the 135-company life underwriting requirements survey my company just completed.

Clearly, there needs to be a strong message sent here: it makes no sense to use 20th century underwriting resources in a 21st century teleunderwriting underwriting environment.

That shouted, now essay #4.

 

What questions must you ask and answer BEFORE you go forward in setting up your teleunderwriting process?

Needless to say, there are many of them and we will touch on most of them throughout this series of essays. For now, we will focus on 2 essential ones:

• Who should do the teleinterviews?
• Where should they be done?

 

Who

In past surveys we have done, and at teleunderwriting seminars we have organized, companies reported a wide range of types of teleinterviewers. This is probably an incomplete list of options:

• Undifferentiated call center personnel
• Individuals who have had clerical level involvement in the new business process
• Former underwriters
• Active underwriters
• Nurses

Each has advantages and disadvantages, which explains why we know of at least several actively- teleunderwriting companies using each of these types of callers at the present time. Therefore, not one of these options should be inherently and unequivocally rejected out of hand.

 

Call Center Personnel

What do we mean by “undifferentiated call center personnel”?

Individuals who work in call centers of one kind or another, but who are bereft of specialized experience in making calls related in any meaningful way to what is accomplished with teleinterviews. You may have active call centers within your company at the present time, involved in everything from marketing to policyowner service functions.

If you do have one or more such call centers already in place – and assuming there is some (conniving?) way to capture a “piece of the action” for teleunderwriting purposes – then this has got to be tempting because it usually means relatively fast and comparatively inexpensive start-up.

Having done “basic training” of in-house and external call center personnel in the context of preparing them to do teleinterviews, I would suggest that the biggest advantage here is that they are paid considerably less than the other types of callers noted above. This means your out-of-pocket cost per interview will be as low as possible.

Count on them to never venture beyond what is on the scripts. Obviously, they are the least-well equipped candidates to do this.

They tend to execute calls very well in the functional sense…after all, they probably have been doing business calls of one kind or another on a daily basis for years, so there is no learning curve in terms of core phone skills.

Lots of reasons to go with an existing call center, eh?

Now, the rest of the story…

While call center personnel handle non- technical terminology flawlessly, they do not do nearly as well with the “big words” and medical drilldowns are awash with words that underwriters even sometimes mispronounce! If you use undifferentiated call center personnel, you will need to place a great deal of focus on training them in this regard and then monitoring their calls to make sure they don’t botch the pronunciations.

Call center personnel are the least adept at “thinking on their feet” (even though we would wager most of them are sitting down when calling!). By this I mean that they have a harder time picking up on those long pauses when interviewees are deciding what NOT to disclose, statements changed in midstream for the same reason, pauses with hand over receiver so they can get “help” from others at their side during the interviews and so on. There are times when interviewers should make note of these occurrences as they may help the underwriter flag occasions of nondisclosure.

Expect little in this regard from call center employees. The other people they interview don’t have the same incentives for distorting reality…let alone flat out lying…as those being interviewed regarding their eligibility for insurance!

We have seen time and again that the information recorded by call center personnel is the leanest in terms of content, as compared to callers more attuned to what it is that we need. They are also most likely to botch spelling of medical terminology and do a mind-blowing job of phonetically spelling medication names. All of this goes with their level of education and training.

You get what you pay for, folks.

 

New Business Clerical Employees (or persons with such experience at some time in the past)

Here we have a significant upgrade in terms of the amount and quality of information gathered during teleinterviews, at least in this underwriter’s experience.

It figures.

These folks are often involved in status calls with agents and know a great deal more about what we do…and thus what underwriters need from teleinterviews…than do call center people who have never been in a new business environment.

Depending on how much net phone time they have had, they may require more training in calling mechanics than call center personnel…but, then, this is true of all types of callers left on our list. And they will need considerable instruction in more complex medical terminology than underwriter and nurse callers, to be sure.

Their salaries are likely intermediate between call center workers and underwriters. So is their capacity to detect those sometimes-priceless nuances during calls that can tip us off to “games” being played with risk histories.

Then, too, they may not relish the thought of being on the phone all day. If they have any career ambition, a good share of it is probably in the direction of “graduating” to underwriter trainee status. Being asked to do full-time teleinterviewing may be a short cut to becoming an underwriter for some of them…but you may have some serious work to do in convincing them that this new role is in their long-term career best interests!

 

Underwriters – Current and Former

In nearly all teleinterviewing environments, the use of active underwriters is contraindicated…that is to say, a BAD call.

Why?

• Companies that have dragooned underwriters into being teleinterviewers, whether as part or all of their duties, have suffered substantial attrition. Remember, we are in a “sellers’ market” for underwriting skills these days and with more and more insurers gleefully telecommuting underwriters from near and far, your underwriters have more options today than ever before if they decide to bolt over their distaste for teleinterviewing.
• It is expensive. Underwriters make a lot more money than the aforementioned types of callers.
• While underwriters bring a lot more to the table in terms of optimizing the information- gathering – after all, if they don’t know what information is needed to underwrite, who does? – they also need the most instruction in the mechanics and techniques of doing calls…and they hate getting that instruction because they see it as beneath their status as underwriting professionals. I happen to agree with them on this.
• If you are going to spend this much, why not go further and get the very best possible callers – nurses?!

In a few settings – mainly in individual health insurance – teleinterviewing underwriters have worked reasonably well, making many decisions by the time the call has ended.

That said, I remain steadfast in saying that currently-active underwriters should not be imposed upon to do teleinterviews.

At the end of the day, there are just too many pitfalls here.

What about ex-underwriters?

This is intriguing and not as infeasible as you might think.

There are many former underwriters out there, either retired (earlier and earlier these days) or staying home to raise a family. Many of them could be lured back, if only on a part-time basis and especially if it was made as convenient as possible (as in telecommuting).

If they do it part time, and in some cases even full time, they are usually amenable to working as self- employed contractors, making the cost attractively lower than salaried employees. This works okay for most of them if they have the benefits they need from working spouses or retirement compensation arrangements.

Telecommuting is here to stay…and it will grow and grow as more underwriters in this favorable employment market (which we created with our own foolishness in the 1990s) demand telecommuting jobs so they can stay living in Fargo (North Dakota), Aberdeen (Scotland), Darwin (Northern Territories, Australia), White Horse (Yukon…just kidding!) or wherever they call home.

Want some heartfelt advice?

GET INTO TELECOMMUTING!

 

Nurses

If ever any underwriter is pro-nurse, it is me.

I know what they are capable of in our world of underwriting.

I saw it when I had the privilege of having a team of ex-cardiac intensive care RNs reporting to me and working side by side with them on tough circulatory cases and analyzing ECGs.

“My” nurses against your doctor in terms of reading ECGs?

No contest!

I have seen this same R. N. excellence in teleunderwriting as well.

After all, who better to ask medical questions and record polysyllabic medical words than nurses, who use such terminology to make a living in a clinical setting?

Nurses have experience in dealing with the two groups even more challenging than deceptive interviewees and agents: patients and doctors. No one else we could feasibly recruit is apt to be better at handling problem calls…and callers… than nurses.

So why not build a team of RNs?

Well, they command at least as much as senior underwriters in terms of compensation…and the supply of those willing to shed their scrubs for business casual attire is not as abundant today as it was 15 years ago.

One novel approach is to have one or two nurses doing strictly call-backs for further amplification of matters not fully probed on routine calls, or arising in the context of MD reports, etc. This is a VERY effective strategy that some enterprising insurers have embraced.

Beyond this, as desirable as an all-nurse teleinterviewing team would be in a perfect world, it may just be too pricey at the end of the day.

 

 

Where

Two choices, right?

In-house or out-hou…err, outsourced.

Actually, 3…a combination of both in-house callers and outsourced callers from service firms… and this is not at all uncommon.

The vast majority of all teleinterviews conducted in the United States are done by callers employed by outsourcing service providers who work largely or wholly within the insurance industry.

That said, the % of insurers who do solely outsourcing is far less “vast.”

How can this be so?

Because the larger insurers tend to be the ones who do the most outsourcing, believe it or not!

Many smaller companies responding to our 135- company survey told us that they either did all the calls internally or combined the two options.

Which is far easier when you are talking 1, 2 or 3 callers…instead of a regiment of callers (as many large carriers require)!

What are the advantages of outsourcing?

• Faster start-up…and this can be HUGE for companies trying to catch up now that they have gotten the message that it is teleunderwriting or bust from here on out!
• Lower unit cost…not always, but usually.
• The potential to lock in to some really skilled teleinterviewers.
• Most major outsourcing firms can integrate the teleinterviews with other services they provide, to your considerable advantage in a non-paper underwriting environment.
• Outsourced providers are geared up for evening and weekend calls. Do you want to take this on in-house? Know that you have no choice. A significant % of all calls are made on weekends. Weekend calls are clearly the majority in middle class and blue- collar markets, as “personal time” is probably the only viable option for most of these prospective insureds.
• Outsourced provider should be – one would guess most are – equipped to handle calls in at least Spanish in America, French in Canada and so on. This is a necessity of life in our delightfully multicultural world and you will need this capacity to the extent you do business with folks who don’t speak the most prevalent language(s) in your market(s).

What are the disadvantages?

• If you are small, you may pay a great deal more per call, as service providers are “notorious” for pricing according to volume of business.
• There may be advantages to developing this core capability in persons within your own organization, as a hedge against the future.
• Once the startup costs are amortized, there may come a time when an in-house program is actually less costly overall than outsourcing.
• You retain more control, with less hassle, over the calling process.

What is the biggest mistake that insurers make when they decide to outsource their teleinterviews?

Actually, there are two BIGGEST mistakes:

• Buying on price only – which is stupid in almost every context in our domain.
• Not doing sufficient due diligence.

As worrisome as the first mistake is, often there is little underwriters can do about it because people who think they know best – but typically don’t – decide that price is all that matters.

The second mistake really causes me to grind my molars.

Lack of due diligence is a PLAGUE upon our house, brothers and sisters!

Too busy do it, eh?

Yeah, right…

Just consider what you are buying, buddy; consider how much impact teleinterview quality will have on your company’s bottom line.

Not to mention whose name – yours – is on the recommendation!

If I were a chief underwriter, it would be a no- brainer. I would look closely at all providers, big and small, before jumping the gun.

I would talk off-line with people using each of these companies to see what their real life experience has been, lest I listen to too much hype and not enough reality.

Why do you think we have STUDY GROUPS in the USA? Why did I create 4 of them just for life underwriters? Because in order to do due diligence, you need to have some connectivity with your peers out there…and study groups provide this connectivity, which makes it far easier to accomplish your mission where due diligence is indicated.

Speaking strictly in terms of interview quality and yield per interview, do the “bigs” necessarily do better work than the “little guys”?

No…absolutely not.

Size is no barometer of quality in this domain.

Trust me on this one, folks.

Shop around. Take your time. The more you know and see for yourself, the better decision you will make.

Chief underwriters that fail to do due diligence belong in the deep “do-do” they should, by all rights, find themselves in…they have earned it with “conduct unbecoming.”

Does this underwriter have a bias one way or the other…in-house vs. outsource?

No, not at all…if you phrase it as I just did. There are pros and cons to each, as we have suggested in the foregoing pages. The final decision should be based STRICTLY on the needs and capacity of the insurer, sifting and winnowing all the information you can get your hands on BEFORE you make the plunge.

Because once you get embedded in one system, consider what it would cost to change.

How about a little of both?

Not a half-bad idea, when you think about it… which may explain why a decent-sized minority of carriers say they do it both ways, so to speak.

Develop a small internal team – or perhaps just one person, RN or amenable underwriter, perhaps only for problem scenarios and follow-up contacts – while outsourcing the bulk of the routine calls. This specialized person or small team could also handle the managing of relations with the outsourced provider…you know, listening in from time to time, auditing the results for consistency and quality, etc.

Can you see merit here?

And no matter what you do in this regard, never forget that ongoing SURVEILLANCE – I prefer this word over “monitoring” because it conveys the appropriate sense of urgency – of outsourced calling is MANDATORY.

If you don’t set this adequate surveillance in motion, then say an “our father” or two… and may The Force be with you!

We will talk more about this in the essay about the URGENCY of auditing your teleunderwriting process.

For now, just take it as gospel that you must keep a keen eye focused on what you are getting for your money.

This is not to suggest that you will get a lot of garbage – our experience and that of our clients has been just the opposite – but there will be some.

The ultimate reality about teleunderwriting?

Easy…

Garbage in…garbage out!

 

 

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.