Ringing the changes – the power of tele-underwriting
Tele-underwriting may sound like a fairly new practice, but it has been around in America since the 1980s, and has been in use in one form or another in South Africa since the 1990s.
However, the process has never quite succeeded in becoming the underwriting method of choice for South Africa’s life industry, as there has always been a lingering concern about the impact it would have on insurers’ long-term morbidity and mortality experience due to the fact that it has not been around long enough.
Easing barriers of entry
Tele-underwriting presents an opportunity for life insurers to use the latest technology to ensure convenience, efficiency and ease of use for clients. It can also reduce the onerous administrative burden which financial advisers increasingly face in the market. With growing compliance requirements, a large chunk of advisers’ income-earning time is eaten up by paperwork.
From a client’s point of view, underwriting is one of the biggest barriers to entry. From the paperwork and blood tests that come with signing up for life cover, to disclosing personal medical information to a virtual stranger, it can be scary and intrusive.
To arrive at a tele-underwriting solution that is not only easy to use, but robust from a risk management process would require the provider to tailor-make the process on every level. It is about asking the right questions, in the right way and then making sure that the right decision is arrived at.
Going above and beyond
A major determinant of success is the underwriting question set in which the lack of face-to-face interaction can be a barrier to understanding. Clear and accurate wording has a big impact on the extent of the underwriting decisions which can be made based on the information provided by the client.
Another key determinant is choice. Some financial advisers and clients prefer to do the paperwork themselves, and it is therefore important to offer both a traditional and a telephonic underwriting process, enabling both the client and financial adviser to decide which process best suits their needs.
Finally, it is important for product providers and advisers to manage the expectations of clients around the actual experience. Clients should know that the interview will take about twenty minutes and that they will be asked detailed questions about their lifestyle and health history. In this way the experience is invariably a positive one.
Beneficial factors
The key advantages of telephonic underwriting include:
• A lessened advice risk for the broker and for the client, as unintentional non-disclosure is significantly reduced. Clients disclose more fully when speaking to a consultant on the telephone;
• Clients are able to ask questions about symptoms or conditions they may not be sure about disclosing. Further questions will gather the relevant information right then and there, reducing later comebacks;
• Improved efficiencies in every aspect of the new business process leading to a quicker take-on;
• Advisers are also saved the hassle of having to go back to their clients with additional underwriting questions;
• There is a noticeable difference in the quality of the data collected in the tele-underwriting process relative to the traditional process, which in turn benefits clients and advisers with accurate rates and long-term sustainability of premiums.
Mainstream practice
Given the benefits, tele-underwriting will become a mainstream practice in the industry. However, it does require the buy-in and support of the financial adviser, who has a key role to play in preparing the client for the process. On the part of the product providers themselves, it requires hard work and careful thought to ensure that the process is tailored to offer clients and advisers’ choice, convenience, and a high-quality experience.
