Notes |
Discussion |
The best practice is to design your underwriting
rules considering the nature of your field force (or other channel).
Unfortunately, the greatest pressure to limit underwriting arises with
the distribution systems that need the most. The purpose of underwriting
is to limit selection against the company, and your exposure to selection
is primarily determined by your distribution system. It is a truism that
the best anti-selection prevention device is the aggressively prospecting
agent who sells only for you. His prospects buy because they were sold,
not because they thought they were going to beat you on mortality. Likewise
when you get all of an agent's sales, you should get an acceptable mix
of risk. |
If you are fortunate enough to have a captive field force,
or one where you are receiving most of the production of a particular
line of business, your need to underwrite is much less than if you are
trying to make it in the brokerage market. As noted however, the pressure
is in the opposite direction. The company with captive agents can underwrite
and not lose business, while if the broker company tries to underwrite
more than his competition, the applications are likely to be redirected
to friendlier terrain.
The best you can do in the brokerage market is to try to make the selection
work for you, that is, let the bad business flow to the competition. To
do that, you need a slight edge in price or benefits, but tighter underwriting
on the impairments that an agent can evaluate in the field. For example,
if your competition is using a blended rate on smoker/nonsmoker, you use
a more favorable nonsmoker rate, and let the other fellow get all the
smokers. It is trickier if your competition is using blended male/female
rates, because his blended rate should be lower than your male rate (and
higher than your female rate), and the majority of insured lives are male.
However, depending on the portion of the brokers' business you are getting,
maybe getting a preponderance of females wouldn't be all that bad. |
You may be told that you need more underwriting, irrespective
of the nature of your distribution, because you are in a market
that has generally poorer health or is more prone to unhealthy behavior.
That is not a correct approach. When the actuary prices your product,
he uses a mortality table that is based upon your own experience, or if
your experience is not credible, his judgment of which of the many mortality
tables best fits your market.
|
This is another problem with the homogenizing of underwriting.
If the actuary has built in mortality premium suitable to the market,
the underwriting standards need to be broadened accordingly. Assume, for
example, that if standard underwriting is applied to an average segment
of the population, 85% would be issued standard. If those same standards
are applied to a segment with a less favorable impairment profile, perhaps
only 80% would be standard. If the increased mortality has been offset
by the higher premium, you would want to attain the 85%. The mortality
of the lower economic sector, with the assortment of untreated impairments
such as hypertension, diabetes, and perhaps more hazardous employment,
has been priced into the product. That is probably a justification for
the "table shaving" approach in those markets. It can be viewed
as a way to adjust standard underwriting to the extra mortality built
into the premium. It is probably more practical to change the "rule"
for a rule driven underwriter than to try to change the underwriter.
|
One way to accomplish a market adjustment when a product
is premiumed for extra mortality is to adjust the screener procedure.
For example, the screener may be required to select the best 80% of the
cases and to issue them standard immediately, with no information beyond
that already on hand, the application, the MIB report, prior coverage
files, and any agent watch warnings. Only 20% of the applications would
then be referred to the underwriter, who would decide what, if any, further
information should be obtained to evaluate the case. Some companies also
place a limit on the percentage of cases on which the underwriter may
seek additional requirements. |
The job of the screener is to evaluate each application
quickly and place it in one of two stacks, the cases to be issued and
the cases to be referred to the underwriter. An experienced screener can
be expected to handle several hundred applications a day. It only takes
a minute or two segregate the apps that have no significant impairments
listed and meet other company requirements. It is important to not break
the rhythm with other clerical duties.
An application will be submitted, i.e. entered into the computer, before
it gets to the screener, so some thought should be given to what the submit
operator is expected to check, and what should be left to the screener,
and perhaps later for the underwriter. For example, the submit operator
should be checking only those items that will be keyed, and computer edits
should qualify the agent number, license and watch status, zip code matches
with city and state, etc. On the other hand, the screener is scanning
the questions for yes or no answers, so is the logical person to catch
unanswered questions, and the submit operator should NOT be checking that.
The screener probably needs a third stack for the later, but if you are
receiving a significant number of apps with skipped questions and other
omissions, you probably have a defective application form. As popular
as it is to blame agent training for such omissions, a reworking of your
app to make it easy to complete can be very effective in eliminating completion
problems. |
"Table
shaving" is the willingness to issue standard to persons who
would otherwise be rated up several tables. The reasoning is that the
additional premium for the extra mortality is small, and is offset by
the saving in the expense of gathering the information to distinguish
the difference. On a purely underwriting basis, this is a doubtful proposition
with most impairments. More important is the savings in agent stress and
worry. The possibility that the agent might have to place a rated case
(and that the prospect refuse the offer) for a small extra premium is
a big thought problem for agents. |
See this
discussion of expanded standard underwriting from the underwriter
prospective, and
this from the actuarial prospective.
On the Stories page, "Turning the tables" is about a company
that had a product priced to be issued standard through table 4. That
means the actuary has set the premium slightly higher to allow "standard"
issue not only to the majority that would be standard anyway, but also
the smaller number of applicants that would normally be table 2 or table
4. That adds about one table to the usual standard premium. In that instance
the underwriters had been told (by top management) to subtract 4 tables
from any rating. So the actuary adding one and the underwriter subtracting
four is pretty humorous, unless of course, you are a stockholder. |
The prospect for covering the extra mortality with expense
savings is a more realistic with impairments such as blood pressure. When
the application discloses a history of hypertension, with the comment
that it is controlled by medication, do you order an APS? If the blood
pressure is controlled to normal range, the case is standard. If the control
is less effective, it figures to be a table 4. A good portion of those
cases are going to come out standard after the company has stood the expense
and delay involved with an APS, so most companies with take the applicant's/agent's
word for it, and issue standard. In that case, the company has a standard
through table 4 practice, at least for hypertension, whether or not it
is stated in those terms. |
Height and weight represents the other extreme. You have
it on the application and the extra mortality is clear. Table shaving
clearly reduces the margin to the company.
Oral fluid testing, the dreaded "swab", is another area where
agents argue that the expense (and effort on the part of the agent) is
not justified by savings in extra mortality. Studies show, however, that
there is a positive return to the company even at very low face amounts.
This study
should be required reading for the officer in charge of that decision. |
Something close to "guaranteed issue" or "group
underwriting" is considered by many to be a requirement
in the workplace market. It is argued that the employer will require every
employee to be offered coverage as a condition of access at the workplace
and a salary deduction slot. In reality, the requirement comes from the
agents, not the employers. Nonetheless, you have to deal with it, and
most companies will issue everyone standard if a threshold percentage
of the employees apply. On the small groups, and at low percentages, you
are clearly exposed to selection.
But you can't stretch the concept. In one company, once the initial enrollment
qualified (with 25 apps, regardless of the size of the work force, already
nonsensical but not the point here) then anyone who decided to apply at
a later time was also guaranteed issue. The chief underwriter had never
questioned the practice. |
A compromise approach to group underwriting at one company
was to require a full app (long form health questions) and MIB on each
applicant. Each case was underwritten and the dollar cost (the sum of
all ratings above standard) of the total extra mortality was compared
to the profit to be expected if all of the policies were standard. If
issuing all of the policies at standard left the company at break even
or better, all were issued standard. If not, all the cases were issued
at the appropriate rating or declined, at which point the agent (and the
employer) could place the cases or not, as he chose. Most employee sets
were issued standard. In the few instances where policies had to be rated
or declined, the agent grumbled, but not the employer. The usual percentage
of the rated cases were placed.
The challenge, of course, is getting anything but a clean app from agents
who are not accustomed to obtaining any health information at all. One
counter is to require a home phone number on the app so you can spot check.
Don't be surprised when you get phony phone numbers. At least then you
know what your situation is.
If you are so fortunate as to be entering the workplace market with your
own agents, or with neophytes, don't bother to offer guaranteed issue.
|
Preferred underwriting may seem to be the mirror image
of table shaving, but it will have a similar effect on the mortality of
your standard classification. When your create a preferred class with
a rate better than your standard rate, you obviously remove some of the
better risks from standard, thereby increasing the average mortality in
your standard class. It is common to see the three-two practice: three
non smoker and two smoker classes. If you create a preferred and super
preferred class, you must increase your standard rates to compensate.
|
Here is a good
discussion of the effects of table shaving, preferred underwriting,
and exceptions. Note the certainty that agents will target companies to
take advantage of the underwriting programs. Even if the subdivision of
the standard class is properly reflected in the rates, a company that
does not monitor the percent of issues falling into each division is going
to find a disproportionate share falling into the highest preferred, and
thus lowest rate, class. Probably agent pressure and underwriter human
nature is going to contribute more to this than agent targeting.
The moral: if you price assuming 10% of the (otherwise standard) risks
will be super preferred and 30% preferred, with the residual 60% standard,
you better make sure that is what happens. As the agents say, expect what
you inspect. |
If your underwriting rules vary by product, to the extent
that the products are interchangeable in the field the agents will select
against you. The best practice is to have one set of rules that apply
equally to all life products. The most common deviation is for whole life
written in the burial insurance market, where guaranteed or graded death
benefit issue is considered a requirement imposed by competition (for
agents). If a company allows underwritten products to be offered alongside
the burial products, some selection is inevitable.
Commission differences can exacerbate the problem. If the company attempts
to offset higher expected mortality with a lower commission, the agent
will be sure to do careful field underwriting, reserving the guaranteed
issue for applicants clearly too impaired to qualify for the higher commission
version. |
In one extreme case, a company had two level term products
which were indistinguishable, other than by the reinsurance arrangements.
However, the issue limits, the non med limits, and the APS practices were
quite different. One required the oral swab and the other did not. Naturally
the agents chose which product to write on a case by case basis according
to their expectation of ease of issue and lack of requirements, particularly
the unpopular swab. Rationally, you might expect the company to prefer
the more liberal requirements on the more heavily reinsured product, but
the reverse was true.
While situations that obtuse are rare, it is generally true that reinsurers
have a better understanding of underwriting than most companies, and are
not subject to the agency pressures. A company has more flexibility in
how it handles cases lower than its retention than with ceded cases. The
company that exercises that to liberalize underwriting on cases below
retention will experience higher mortality, as the agents keep the face
amount of the sale just below the threshold.
As is stressed in the Reinsurance page,
you are going to pay all of your death claims in the long run, so reinsurance
should never be a consideration in establishing your underwriting rules
and practices. If you are hoping for a version of the greater fool theory
to apply, it may, but it won't be the reinsurance company. |
A lot of premiums are lost in underwriting
on cases that are approved. A policy is dated the date
of the application unless it is delayed for underwriting requirements,
and then the common practice is to date it the date of underwriting approval.
Even though the company has CWA, and the applicant has coverage, no premium
is earned between the app date and the approval date. The delay in starting
the bank draft is not what the applicant expected, and he forgets about
it and spends the money elsewhere. You can lose the case because of it.
|
A better practice is to date all policies (except those
that are obvious declines on the app) the application date, and start
drafting premium on schedule, even if the case is delayed for months in
underwriting. If CWA is one month, then the first draft date would be
one month after the application date. Drafting probably creates the equivalent
of a binding receipt, so mailing a formal
binding receipt to the applicants which are delayed past the first
draft date adds no risk, and should have a positive effect on retention.
The premium drafted is simply added to the CWA on the pending file and
not applied until the case is issued. If there is a concern over the added
risk of a binding receipt, take a hard look at the your conditional receipt
cases where death occurred prior to issue. You will find that you paid
most of them, and on the rest you ran up some lawyer bills before paying
the face plus some extra for the opposing lawyer. You are on the risk,
so why not collect premium for it?
Note: one company was dating the policy the date of issue (instead of
the app date) even on cases with weren't delayed. That is the sort of
thing you will get unless you go look at what is going on in the cubes! |
The first line of defense in underwriting is of course
a comprehensive application, accurately completed by
the agent at the point of sale. To accomplish this, you need a system
that identifies those agents that give you reliable information, and those
that don't, and that adjusts the extent of the subsequent underwriting
requirements accordingly. Of course the agents need to be fully aware
of your system. Again, the distribution system creates nuances. If you
have captives, management pressure on the problem agents can get you improved
applications. With brokers, the best you can hope for is to get those
"clean" apps that "smooth over" health problems sent
selectively to your competition. It is a tough balance, as the carrot
most often offered is quick unencumbered issue (less underwriting for
accurate apps), and that might have the opposite effect. |
A system I have used to good affect with captive agents
is descriptively named Red Watch-Yellow Watch-Green Carpet. A database
is maintained of "hits", where other information turns up false
or misleading information on the application. With any single app, you
do not know if it was the agent or the applicant doing the concealment,
so you are looking for patterns. With a single hit, the agent is on "yellow
watch", which means only that he is no longer entitled to whatever
sweetener you provide for the "green carpet" agents. But several
hits, the exact number depending on how blatant the situation is, and
the agent moves to "red watch". That means that every one of
his applicants gets a phone call to check on the information. Then one
of two things will happen. Either the hits pile up rapidly (because now
you are asking the questions directly on the phone), or they don't. Things
get obvious quickly, and it is time for agency management to attempt to
convert the sinner. In an amazing percentage of the instances, they will
be successful. If not, you have to eventually terminate the agent.
For those green carpet folks, you might try a monthly publication like
the "Green Carpet Flash". I see if I can dig up some of those
to scan. Do it right, and it can be a bit of an embarrassment to be the
only agent in the agency not to get one. You know you are winning when
you start getting anguished pleas to be added to the mailing list. You
will probably hear from the agency guys that the bad agents need the helpful
information more than the good ones. Your answer? Let them borrow a copy
from the agents that aren't clean apping you. |
A good telephone operation is a necessity.
It gives you the ability to check on the information you are getting on
your applications, and it will provide better information than a commercial
inspection report (which is done by phone anyway). Even if you prefer
to outsource that, you need the capacity to call the applicant to fill
in bits of information, either because it was left off the app or was
ambiguous, or because the underwriter is wondering about something. Sending
the question to the agent is demonstrably ineffective and leads to incompletes,
but that is exactly what the underwriter will do if you don't have telephone
capacity yourself.
Be sure your application requests a phone number and/or an email address
"where we can reach you during the day if we have any questions".
Be sure to go for that email address. Today more people can be reached
at work by email than by phone. |
Calling the applicant is not something you will be able
to get your underwriters to do. If you or I were looking at an app and
wondering about something (particularly if it relates to what the applicant
wanted), we would automatically pick up the phone. If you have to wait
two weeks for an answer to that sort of question you will have either
forgotten why you wanted to know, or won't care. For whatever reason,
too shy, too busy, too professional, underwriters don't call. I suspect
the typical underwriter mentally processes files as they come, and it
doesn't matter whether to him whether the file comes back a month from
now, or in 5 minutes.
The underwriter generally prefers to write the question on the underwriting
worksheet and have someone else call, or email the agent. So the next
best thing to an underwriter that makes calls is having someone handy
to the underwriter that makes calls and gets the answer back to the underwriter
while the file is still sitting there.
Conversely, you don't want your screener making calls. They should be
moving too fast to be reflecting on the esoteria of apps. The goal of
a screener is to separate out the 70 to 80% of the apps upon which there
are no questions, and to issue them on the spot. The chaff goes to the
underwriter, who can decide what needs to go to the telephone team, or
for the ordering of requirements. |
Speaking of applications, the form itself
warrants careful work, making it convenient and easy for the agent to
complete. Most applications I see are error prone, crowded, and unnecessarily
long and complicated. I recently saw one that was 12 pages long. It did
have a very nice picture of an eagle on it, but I am not sure why. |
A little work will give you a single sheet, two sides,
application 8 1/2 by 14, legal size, with the bottom 3 inches the tear
off that is left with the applicant. If you have products that require
real differences in the app, why not have a second app? What is better,
two single sheet apps, or one two sheet app? What do you think the agent
has a better shot at, picking the right app, or filling out just the appropriate
spaces in that multiple page jumble? Here is a good app I made this years
ago, so you will want to make sure the authorization forms are up to date.
The agents of the world would like a single page
application like this. Note that the tear off language is at the bottom
of the front page and the top of the back page. The app turns over end
for end, not side by side. |
This section may seem like an odd place to discuss agent
advancing approaches and agent retention, but most executives
would admit that underwriting does more to screw up both than the rest
of the company combined. Experience proves that the speed of issue is
more important to agent attitude than the actual decisions. The result
is the same, however, because ordering requirements is the major source
of delay. |
The purpose of the agent advance is to get enough money
into the agent's pocket quickly enough so that he can make a living. Other
things being equal, the more money you can get to him, and the quicker
you can do it, the more likely he is to stay with you. Of the list of
things that cause agent turnover, right after just not liking the business
comes starvation, and next, frustration about pay caused by underwriting
and issue delays.
Ideally, you would insulate the agent's pay from underwriting activity.
The first obvious step (I will consider the negatives later) is to advance
on submit. To avoid weekly cut-off problems, you advance on each case,
the day the app arrives. To avoid charge back frustrations with cases
that don't get issued, you don't charge back as long as the agent meets
percentage of issue standards. Agency professionals often point out that
most advancing systems are designed to avoid bad balances on the worst
agents, not to encourage and retain the best. They also often seem designed
to be self actuating, so that agency management can avoid the hard work
of staying on top of the situation, agent by agent. |
Most restrictive advance rules can be traced to fixed
ideas about renewal commissions. Have you heard "I want my agents
to have renewals in the future"? That is a nice sentiment, but the
agents (and stockholders) would have preferred the agent make a living
today. How about "Charge-offs of bad balances look bad"? That
sounds frugal, but penny wise and pound foolish. Reasonable uncollectible
balance creation can be very profitable. Turnover is your problem, not
balances. And then there is "balances demoralize the agent".
That is right up there with "just because" as a reason.
|
Advancing on submit instead of issue does mean you have
to either cut the advance to allow for the difference, or do charge backs.
Of course, if you do the former, you can set the percentage to match the
experience of the specific agent. That sends your better agents more money
and the lesser ones, less money. Sounds like a plan.
Advancing on submit can also lose the attention of the agent if you need
him to do anything after submit to support underwriting, like order a
medical. In my view exams should be ordered by the home office anyway,
and since the days of asking the agent to bother doctors for the APS are
long gone, what is left? Delivering amendments and ratings perhaps.
Insulating the agent from underwriting results will can cause balance
problems with agents that are dishonest, or just plain bad salesmen. Excessive
loss of business is created at the point of sale, nowhere else. That is,
if you don't have other mechanisms for getting rid of those agents. There
is always letting the agent go, I guess, but that is so unpleasant and
stressful. But suppose you had a system that identified the poor or dishonest
salesman, and then let the future balances be the responsibility of the
manager? We know that doesn't work with the first line manager. His ability
to hope, rationalize, or deny is limitless. I was thinking of the top
agency person. Cut the CEO in for a little of that, and that will get
it done. Impractical, yes, but you get the idea. |
Post-claim underwriting is the practice
of issuing policies with little or no underwriting, taking the answers
on the application at face value, and then doing in depth underwriting
when a death claim is received. While it is prohibited in most states
on certain types of coverage (such as LTC), the picture is cloudy regarding
life insurance. Most insurance professionals consider the practice unsavory,
and would deny that their company engages in it. On the other hand, they
feel the company should have the right to rely on the statements in the
application, and to investigate when there is an early death. How do you
resolve this?
In my opinion you should NOT investigate (underwrite) every death claim.
There should be some reason, suspicion, or tip off to point to as the
reason for the investigation. If your claims manager testifies that it
is your practice to investigate every claim regardless of circumstances,
that is prima facie post-claim underwriting, with negative implications.
Second, if your practice is to issue every case off the app, and to ignore
information that a reasonable underwriter would investigate, it is pretty
clear what you are doing, and you are going to lose most of your cases
in court.
|
In this case the court characterized the underwriting
as "a cursory investigation which involved simply
running a check with the Medical Information Bureau and reviewing the
application." When the claims administrator testified that "always
does a post-death investigation" of the medical history, that was
enough for the court.
In Standford
v. Veterans Life, the court held for the plaintiff insured, even though
material health questions were answered in the negative. The court rejected
the claim that the insurer was bound by whatever the records of the doctor
reported on the app would have revealed. However, the claims administrator
for the company testified that the company always did post- claim underwriting
when death occurred in the contestable period. Apparently, the court held
for the plaintiff SOLELY for that reason:
"Because the court finds coverage on the basis of post-claim
underwriting, it does not have to reach this issue."
The cases in most states do not come down so nakedly on post-claim underwriting,
but it is likely the company is losing on that issue. Often the court
will say the insurer should have inquired, usually of the doctor shown
on the app, ignoring all the times they have said that the doctor information
is not imputed to the company just because a doctor is listed on the app.
|
The internet is full of lawyer sites soliciting claimants
who feel they have been the victim of post-claim underwriting. Most sites
imply that the law is clearer than it is on such cases, but the lawyers
are probably right that it doesn't take anything more to justify a shot
at a lawsuit.
This
from law free advice: Because some insurers engaged in "post-claim
underwriting", a practice in which the insurer would write a policy
and take the premium, and only after a claim was submitted look to "find
a way out of it", many states have statutes which prohibit "post
claims underwriting." In those states an insurer or plan cannot rescind
or cancel a policy once an insured has filed a claim for benefits unless
the insurer or plan can prove intentional fraud.
|
Regarding post-claim underwriting on long term care policies,
where the legislatures and courts have been active in protecting the interests
of seniors, such a practice would probably mean the insurer loses, whether
there is a specific statute or not.
Texas Senior Law:
In most states, all medical questions, examinations and the decision
to issue coverage must now be made "up front." The practice
of "post-claim underwriting" is outlawed there. No more selling
policies to anyone who can write a check, then looking for excuses not
to pay after a claim is made!
Unfortunately, as of October, 1995, there were 16 states, including
Florida, Texas, Massachusetts and New Jersey, that had not banned post-claim
underwriting.
|
Suppose the insured is killed in an accident while still
in the contestable period. Some claims departments completely
underwrite the case to see if they can find any impairment not disclosed
on the application. Aside from the questions raised about post claim underwriting,
is that a smart way to spend your money? If you don't find anything, you
have wasted the effort. If you do find something, and deny the claim,
you have a guaranteed lawsuit. If you total up all of your experience
in these lawsuits, you will find it would have been cheaper to pay all
the claims up front. |
The law varies from state to state on whether the cause
of death has to be related to the concealed impairment for the later to
constitute a defense to the claim. But if you look at your actual results,
rather than what the statute says, you may find the "law" is
different than you think it is. Most of the cases you defend on this ground
end up settled for the amount of the policy plus attorneys fees. Your
attorney gets very uneasy when it is time to go in front of the jury with
a defense that most laymen will characterize as just digging around to
find an excuse not to pay the claim. If you lose the summary judgment
motion, you might as well pay up.
The accidental death is the extreme case. There is more disagreement
concerning the proper course when an impairment was concealed, but the
cause of death is something different that the insured did not know about
at the time of the app. If there is no relationship, for example, concealed
hypertension but death from cancer, you have a problem similar to the
accident situation. You can get some tough ones, like the drug user who
gets shot in the street. The key is to have clear rules about what gets
reviewed before your claims people precipitate the lawsuit. |
A claims committee should review every claim which the
claim manager proposes to deny. If you are going to avoid the dumb moves,
you need somebody on that committee that thinks that the purpose of a
life insurance company is to provide the policy benefits for the beneficiaries
when the insured dies. You need to attend some meetings and listen. If
what you hear is about saving the company money, get yourself some members
that believe in life insurance. If you go broke paying death claims, the
problem was back when the top management established the policies for
the field and underwriting, not at claim time. |
Here is an example of a dumb move. The cause of death
was gas inhalation, and the policy had a clear exclusion of death from
gas inhalation. So the claims manager denied the claim. Simple, except
that the deceased was working at the bottom of a storage tank which had
been emptied for cleaning. A little thought will tell you that the "gas"
exclusion was there to avoid those probable suicide situations that you
can't prove. And why punitive damages should sometimes be awarded.
How about when the applicant is on oxygen when the agent takes the app,
you know, with those things in his nose? Nothing on the app about it.
How about when the applicant is in a wheel chair because a leg was amputated
due to the diabetes that shortly thereafter killed him? How about when
the app was taken by an unlicensed new hire?
When a case just doesn't feel right, or when the claims committee has
to worry it for 30 minutes, pay the claim. You will save money while doing
the right thing. Can't beat that. |
Most claim departments (and legal departments) do poorly
when dealing with the claims of juvenile beneficiaries. Granted that someone
not of legal age cannot give a valid release, and you are not going to
send one a $100,000 check until you have evidence of a court appointed
guardian of the estate. But what about those small claims? If you can
get beyond the legal technicalities for a minute, do you really think
that if you pay every such claim under, say, $5,000, that the juvenile
is going to make you pay again when they turn 21? You can do this for
a long time before you run into the first amoral screwball, you have saved
a lot of administrative cost, and you still probably win the case. |
The non productive technical requirement issue extends
to other beneficiaries as well as juveniles. A quick run through of all
the claims that have been processed but not yet paid will reveal a number
waiting for some release or statement that should be waived. On most of
these you are paying interest on the amount due. If you waive enough of
these requirements you will end up paying one or two twice, and still
money ahead. |
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A site about running a life insurance company has to discuss underwriting.
But before you click to another page, let me assure you we not going to
discuss the rules that are covered in the manuals produced by the reinsurance
companies. As usual, this page will take a different slant: why you can't
beat underwriting, and how to keep it from beating you. Underwriting is
clearly one of your biggest expenses, and certainly the biggest frustration
to your agents (and to you, because underwriting is all the agents want
to talk about when you want to talk about production). Not surprisingly,
it is also the area that most executives don't care to learn much about.
It is boring, bookish, and takes place in little cubicles. Further, when
you talk to most underwriters you get more trees than forest, so it is
hard to get any suggestions for improvement. Underwriters tend to view
"improvement" as getting more requirements and catching more
bad risks, while you may have been thinking of issuing more business,
faster.