Munich Re has completed a fact-finding mission abroad with renewed confidence in the UK protection market. Describing it as “the best in the world”, head of marketing Andy Milburn said the sector was strengthened by bold underwriters who were “far more willing to change and take advantage of new techniques and technology and to take a calculated risk”. However he urged the industry to press forward at an even quicker rate.
Health Insurance conducted its own survey of the field in a bid to identify what lies ahead for underwriters, advisers and their clients.
The International perspective – ANDY MILBURN, HEAD OF MARKETING, MUNICH RE
The Americans have non-contestability clauses and they do loads of medical tests as a result. Here in the UK we are going in the opposite direction – getting less tests and examinations. We are finding in most cases that everybody who has adopted this is finding it works quite well.
The preferred lives approach in the US has gone crazy – I don’t think it’s sustainable. They couldn’t believe the emphasis on consumer groups and press about unpaid claims in the UK.
However, we’ve got application forms 40 yards long – that’s not good enough. It’s too complicated. Although we are a mature market, highly experienced, with lots of qualified people, we tend to move like a mammoth.
The Reinsurer’s perspective – PAUL GYSEMAN, CHIEF UNDERWRITER, MUNICH RE
Quite a bit of non-disclosure we see is encouraged by the broker. If we take him out of the underwriting process it’s better for the applicant, the insurer and the broker but they don’t realise it yet. They are good at advice and making sales but when it comes to risk assessment they should be able to hand it over. Some brokers are already grasping that.
The Wellbeing perspective – DR DOUG WRIGHT, HEAD OF CLINICAL GOVERNANCE, AVIVA UK HEALTH
One of the exciting products we are getting near to is a product that links certain levels of discounts with the healthiness of the profile. The biggest barrier to people changing is actually seeing tangible benefit. We are increasingly thinking that underwriting is not so much part of the sell but part of bringing people on board. The more lifestyle gets factored in, the more the relationship between the customer, the adviser and the insurer needs to be very, very well controlled.
The Adviser Service perspective – MIKE TAYLOR, CHIEF UNDERWRITER, AXA PROTECTION
Providing advisers with access to underwriters is important. We take 400 calls a day – more than any other underwriting department. But there are lots of things we can do to reduce phone calls like text messaging and emailing phone updates.
I’m not sure it’s fair to say the industry is slow-moving. We work in a very heavily regulated environment which can prevent aspects of innovation. But we have just spent millions over a couple of years in putting in a new point of sale system with dynamic underwriting that could produce an immediate decision in 40% of cases.
The chief Underwriter’s perspective – DEBBIE AKERS, HEAD OF UNDERWRITING AND REASSURANCE, FRIENDS PROVIDENT
Developments will be determined by what is socially acceptable in the country. I’m not sure IFAs will be taking swabs from clients! Pharmacy screening is being piloted and for others it will be very handy having somebody come to their home to carry out tests. Patient records are being held electronically so the technology is there to enable the insurer to extract relevant information to populate an expert underwriting system. But getting the medical profession and insurers linked up is quite a challenge.
There are pilots in some parts of the country where patients are allowed to access their own electronic records over the internet. In terms of lifestyle-based questions you do need the evidence base behind them to link them to risk and pricing. You can’t say “because they have this car they are going to drive over the limit”.
The Inclusion perspective – KEVIN CARR, DIRECTOR OF PROTECTION DEVELOPMENT, PRUPROTECT
Risks that were previously uninsurable will become insurable, like HIV which we now cover for income protection. Better data is enabling that as well as improved technology. Having international links is absolutely important. A lot of what we do is based on South African ideas. Nobody wants to make the underwriting process so complicated that we put people off. If we can underwrite more accurately and charge more accurate premiums it could well mean lower premiums. Some questions will replace older questions, not add to the list.
The IFA’s perspective – ALAN LAKEY, PARTNER, HIGHCLERE FINANCIAL SERVICES
In terms of distancing the adviser from the underwriting process I fall between the two viewpoints. If I help the client fill out the application form and it comes back declined or rated I will have a good idea why but it also does leave me slightly exposed [in terms of disclosure]. I’m kind of veering away from teleunderwriting for people where I think there might be a problem. I have sometimes thought about developing my own generic application form covering all the main questions to address this problem. There does need be some design process where you only need complete questions relevant to the product. If we are going to sell these plans we must not put obstacles in the way – like a 32 page application form. We need to fast track the process, have more instantaneous underwriting where feasible, and companies need to be very sensible about the questions they ask.