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Who understands your health better, you, or your doctor? Analysis of GP reports and telephone interviews requested in parallel on the same applicants for protection cover suggest that individuals are often able to provide more information of relevance to insurers on their health status than their GP.

A recent analysis compiled across eight client studies by Morgan Ash showed, in all instances, less missing information on the telephone interview than on the reports.

The reasons for these findings are not fully understood. Certainly, individuals do not always consult their doctor in relation to medical conditions. Sometimes, even recurrent symptoms will be self-treated or ignored. Some aspects of an individual's health may not be accurately communicated to their doctor, especially lifestyle factors such as smoking or alcohol consumption. This type of behaviour means that medical records may not be complete or entirely accurate. In addition, the completion of a report by a doctor relies on their interpretation of the medical records in question.

The picture is certainly not, however, entirely one-sided. Even for companies specialising in telephone interviews, GP reports remain necessary tools to assess more complex or serious medical conditions. These companies focus considerable effort on developing an optimum balance between the two types of evidence, identifying where customers are able and comfortable to provide accurate information to assess risk, and, importantly, where disclosure levels may be improved to protect the customer.

Most providers are now using telephone interviews in one format or another in the underwriting process. The fastest growing sector is the utilisation of so-called 'little t' interviews to obtain further information from the applicant in relation to disclosures made on their application submission in lieu of obtaining a GP report.

The majority of medical evidence obtained by insurers is in relation to customer disclosures rather than to routine evidence checks issued due to higher sums assured. Telephone interviews are proving a powerful means of reducing the need for this type of medical evidence through well-designed, carefully managed telephone conversations with customers.

In addition to obtaining more information on disclosures, the 'little t' process brings the added benefit of confirming other key application answers with the customer. Studies show that about 2 per cent of customers who say they are non-smokers on their application submission 'come clean' during a telephone interview.

These interviews are proving particularly effective when underwriting income protection, a product which historically has been badly impacted by lengthy underwriting processes. Key risk areas, such as mental illness and back problems, are often not discussed with GPs. In addition, applicants understand these conditions and are generally happy to discuss these in an appropriate call environment.

The potential for improving case turnarounds through the use of telephone interviews is certainly very clear. Medicals Direct data shows an average turnaround of three calendar days for interviews compared to an average of five weeks or so for a GP report to be returned.

The impact of telephone interviews on income protection underwriting is demonstrated by a recent Pioneer project which has seen GP report requests reduced by 25 per cent and the recently launched LV= mortgage income protection product, which is seeing final decisions made on more than 70 per cent of cases based on the initial telephone interview. Axa, one of the telephone interview pioneers, underwrites 80 per cent of lives without medical evidence averaged across all product lines.

Telephone interviews are beginning to reduce underwriting delays and will, in time, materially impact on one of the most intractable challenges that protection customers, insurers and advisers face - getting cover in force quickly on the right terms.

The protection industry has long struggled with the challenge of reducing high levels of non-disclosure during application submission. The success of telephone interviews in drawing out accurate disclosures from customers is beginning to lead to an increasing usage of 'Big T' underwriting at point of sale.

This type of approach sees the adviser completing a very simple referral with the customer and the transfer of the main application process to a telephone-based interview managed by the insurer. The use of full telephone interviews to complete the application form does bring additional cost into the picture from the insurer's perspective. Business models need to consider trade-offs with improved disclosure levels and cost reductions in other areas.

Improvements in disclosure rates can, however, be striking. A Morgan Ash study carried out in 2007 showed rates of material non-disclosure - that would have affected underwriting terms - at 24 per cent for life and critical illness covers and 34 per cent for income protection where full nurse telephone interviews had been used.

Reducing non-disclosure is positive for all stakeholders, most notably the customer. Accurate information at underwriting stage means no risk of claims being declined for non-disclosure.

During a claim assessment, insurers are expected to give due consideration to any explanation offered by the customer in terms of why inaccurate answers were submitted at underwriting stage. A transfer of the application process to the insurer means that the adviser is protected against any liability should a problem with disclosures be identified later.

At claims stage, recorded telephone interviews bring absolute transparency in relation to the original application process. Insurers are protected against intentionally withheld information and customers are protected against flawed or unreasonable questioning processes by the provider. The audit trail provided by call recordings can also facilitate business processes which do not require a signature.

The adviser and provider relationship has always necessitated a level of trust in terms of the way the insurer treats each customer. The increased level of direct customer contact required for telephone interviews does extend this reliance.

Transparency means that providers are strongly motivated to construct processes which are designed to build a rapport with the customer and carry out the questioning process in a clearly explained and reasonable manner. The Association of British Insurers has published guidelines in relation to the design of electronic and telephone underwriting processes.

Morgan Ash data shows that less than 1 per cent of interview summaries are annotated with material additional information when these are sent to applicants for review following the interview. Axa carried out independent research in March 2008 in relation to customer satisfaction and found that 89 per cent of customers were "completely satisfied" and a further 10 per cent "fairly satisfied".

Advisers can choose whether to select a telephone interview option. Where the application process is transferred away from the sale environment, the adviser can potentially benefit from a more succinct sale process, especially in circumstances where this comes at the end of an already lengthy consultation.

In addition, greater focus on generating and completing sales is possible through reduced time spent completing application submissions and associated administration.

So are telephone interviews the universal solution that turns all protection underwriting into a painless, slick process? Certainly, greater use of the telephone in various forms during underwriting is materially impacting for the better on the way we do business in some really key areas. Disclosure levels are improving and underwriting is speeding up. Perhaps most strikingly, industry reliance on GP reports is rapidly reducing.

Importantly, advisers have the option of freeing up more time to provide advice and of removing any potential liability associated with the accuracy of data submitted.

In terms of the way future underwriting processes develop from a point of sale perspective, advisers will play a major part in influencing future life insurer business models. Full telephone interviews will, ultimately, integrate into market practices in areas where individual advisers value and trust the service provided.

Electronic underwriting propositions will also continue to develop alongside telephone interview services. The full potential of interactive electronic functionality at point of sale will be harnessed through improving technology. Electronic customer signatures will improve the audit trail in relation to application information submitted through this medium. Web portals will be utilised to offer the applicant a confidential environment to provide disclosures away from the sale process.

Offering choice to advisers in terms of how business can be submitted is likely to become an increasingly key aspect of insurer propositions.

Over time, protection products will become much simpler to buy, hopefully leading to higher penetration rates. Ongoing development of underwriting techniques will be in a combination of different areas, but making the most of simple dialogue with our customers is becoming a really key aspect of this progress.

Warren Copp is chief underwriter of Pacific Life Re