by Naomi Ballantyne
Underwriting has always had a mystique about it. In past years underwriters were pretty much lords and masters of their domains and were often completely unapproachable. Woe betide any adviser who dared question the decision of an underwriter!
But by 1990 the market started to change. New, inexperienced people were recruited into underwriting and were trained along the lines that underwriters were just one of the cogs in the new business processing wheel and that speed and customer service were vitally important to them. Gone was the positional respect afforded previously and underwriters had to be answerable to advisers for the first time.
At the same time that this 'normalising' of the underwriting process occurred companies were pushing hard to compete by introducing softer and softer policy definitions as well as pushing underwriters and new business processing people to meet ever increasing service standards in terms of turn-around times. It was also at this time that many companies actively employed transfer provisions that effectively allowed business to be transferred between companies without underwriting. Companies were pushing harder and harder to speed up the underwriting process, completely oblivious to the claims issues that were about to hit worldwide.
Now that the impact of disability claims experience has hit the market, companies have had to sit back and consider how all of the activity of the previous few years has contributed to this claims experience. Prices are being increased and policy conditions are being tightened. The underwriting process is also under review and some companies have now actively 'tightened up' their underwriting.
While it is laudable that the industry is prepared to tackle such a major problem, this new focus on underwriting needs to be very carefully managed. Companies have a challenge to avoid 'blaming' their underwriters for the claims experience to date whilst addressing any specific issues that they find.
Blaming underwriters only pushes them towards ensuring that they completely absolve themselves of any possible future blame. The outcome of this is an increase in medical requirements, an increase in referrals to reinsurers and a total 'by the book' approach so that they are not required to make any individual 'judgements' which may later be found to be flawed.
While this approach will certainly protect the life company it has an enormously detrimental effect on both the adviser and the client through long delays and inconvenience to the client who is required to undergo the various examinations and tests.
While Club Life certainly understands the importance of the underwriting process in managing claims experience, we believe that underwriters must still be prepared to and should be encouraged to make a judgement taking all reasonably available information and each client's personal circumstances into account. While inexperienced underwriters could be forgiven for relying on 'the book', it is not a reasonable approach for experienced underwriters to take.
Club Life takes enormous pride in our people and we are very confident that our underwriters are sufficiently trained and experienced to make the judgement calls that they are faced with every day.
If advisers are becoming frustrated with the underwriting of a particular company it is possibly because either the underwriters are too inexperienced to let go of 'the book,' or that the company has created an environment where its underwriters are not prepared to stick their necks out. Neither of these approaches will deliver what advisers and clients are looking for. Club Life provides advisers with an alternative. This advertorial is provided by Club Life.
Naomi Ballantyne ONZM, is the Managing Director at Partners Life.
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