by Russell Hutchinson
Today everyone knows that barbecue plans cannot be made firm until January and even the apparently healthy client has been popping Prozac for a decade. The factors that have created this ‘new normal' era of the loaded life are several, and will vary with your business. Maybe your clients are older now, and therefore more frequently have chronic health problems. Certainly underwriting standards are higher. Partly that arises from more product complexity.
I believe ‘standard rates' for ‘non-smoker' remains the most common rating category assigned by a long margin. But perhaps we should become savvier with our pricing categories.
When ‘non-smoker' rates were first introduced the smarter companies called smoker rates ‘standard' and then called non-smoker ‘preferred'. Today we should welcome a new categorisation which rewards those clients that have regular exercise, low blood pressure, and have never smoked with even better rates. Changing the ‘smoker' category back to ‘standard rates' and allowing it to absorb moderately loaded non-smoker lives would be a smart idea too - because instead of the policy endangering stigma of a loading a client could have ‘standard rates' which sounds a whole lot better. Some rules to enable you to quote it and avoid the nasty surprise of a price increase would help too. Because it's all about marketing.
It's all about positioning the price in the client's mind. What we do right now - quoting the absolute lowest it could possibly be sets us all up for disappointment as we go through the process of underwriting.
So is this an idle fancy which would make no difference? No, it is another sensible innovation which is offered in several markets around the world which we don't have here. Which is why I am exasperated when I hear insurers talking about how hard product innovation is - there remains plenty to be done.
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