When Producers Encounter Teleunderwriting

Hank George, FALU, CLU, FLMI
The National Underwriter • July 2005

Preface

This is a message for all senior executives, chief marketing officers, sales VPs, agency managers, brokers and agents on the subject of teleunderwriting. Those who take a few moments to read it will be empowered to change their companies in ways that are certain to pay back handsomely, both immediately and in the years ahead.

At the last meeting of the Underwriting Vision Group, this underwriter, as founder and chair, asked one of the members to “describe the impact teleunderwriting has had on your company.”

His response?

“WONDERFUL!! WONDERFUL!!”

The respondent is VP of Underwriting at a prominent life insurer. He is one of a dozen who serve on this issue-focused underwriting discussion group.

We know from this exclamation and also from countless statements by new business executives that teleunderwriting has been the greatest innovation in the history of life and health underwriting.

This essay is directed at answering one imperative question that is seldom asked and rarely comment upon: what are the implications of teleunderwriting for producers?

Teleunderwriting means using a telephone interview, buttressed by drilldown amplification of all YES answers to risk-relevant Part I and II questions. The advantages conferred upon insurers from deploying the teleinterview are now recognized and applauded across North America and around the world.

What are these advantages?

• Cutting application-to-issue cycle time by 50% or more
• Reducing new business acquisition costs dramatically
• Diminishing dependence on customer-unfriendly risk appraisal tools
• Enhancing the value of information on which insurability is determined

Clearly, all insurers are incentivized to pursue teleunderwriting.

But what is in this for the beleaguered producer?

Advocates of teleunderwriting encounter a paradoxical “buzz saw” of suspiciousness and even hostility over this question.

Why “paradoxical?” Because teleunderwriting serves no interests more completely than those of the producer!

A recent LIMRA survey determined that the second most pressing issue on the minds of producers is nerve-wracking delays in getting business issued. This comes into focus as we integrate life insurance with other financial service products. The other products are acquired transactionally, rather than receiving at Halloween was first sought on Labor Day!

Teleunderwriting is the only way to make inroads here. Thus, it comes as no surprise that companies who have converted to teleunderwriting report dramatic reductions in new business cycle time.

Fact: The “incomplete” is everyone’s nemesis.

Reality: There are NO incomplete applications with teleunderwriting.

Fact: The “not taken” is even more agonizing.

Reality: The “not taken” rate is proportional to time spent in underwriting. Faster underwriting means more “paid for” business.

Fact: One prominent chief underwriter estimates 50% of producers’ time is deflected to managing transactions related to the processing and underwriting their new business.

Reality: With teleunderwriting, the producer is freed of this burden. This means more time to sell.

Fact: The physician’s report is not only our slowest and most costly underwriting asset; it is also the one most distasteful to the client.

Reality: Teleunderwriting sharply reduces the volume of medical records needed. One teleunderwriting-driven carrier reports a 65% reduction in APS acquisition, with no discernable adverse effects on mortality.

Speaking to and with producers, I hear ruminations over “control” of their business. Teleunderwriting is perceived as intruding to the point of making it all but impossible to even ascertain if the client is “preferred.”

Over three decades, this underwriter has preached fire and brimstone on the merits of fact finders and cover letters. Now this message takes on a new degree of urgency.

Properly executed, the fact-finding interview guarantees sufficient insight into client insurability to determine the most appropriate basis on which to apply for coverage. The cover letter is the producer’s proven pipeline to his underwriter. The fact-finder gathers in “the rest of the story;” the cover letter shares these critical insights with the underwriter.

Is it time to take steps to raise consciousness as to how these two assets mitigate angst over teleunderwriting? Making enlightened use of fact finders and cover letters will put to rest most producer anxiety about teleunderwriting.

The most urgent collective pay-off from teleunderwriting is more conceptual.

Fact: The number of career agents and brokers continues to decline.

Fact: Alternative modes of distribution (e.g., bancassurance, telemarketing, Internet, worksite) are making great inroads into what was once the exclusive domain of the traditional producer.

Critical factors driving these changes emanate directly from business acquisition costs and the inherent advantages of non-traditional distribution in terms of meeting customer expectations.

Reducing acquisition costs, slashing application-to-issue intervals and making the whole process more customer-friendly are what teleunderwriting is all about!

As goes teleunderwriting, so goes our future.

On balance, teleunderwriting is the best thing that has ever happened to the producer. As it does away with the tedious, costly and burdensome ways of the past, the genuine interests of the career agents and brokers are served like never before.

If your company is proactively into teleunderwriting, support them while making your needs known.

If your company has teleunderwriting on its radar screen, give them a “thumbs up” and insist on contributing to the design and implementation of the process.

Fact: Insurers, who report having worked hand in hand with producers to create their customized version of teleunderwriting, report the highest levels of success.

If teleunderwriting is as yet an unspoken word, ask “why?” (politely, at first).
Your future – our collective futures – will almost certainly depend on it.