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While tele-underwriting is a relatively new concept in the world of insurance it has quickly become well established and proved popular with advisers keen to pass the risk of non-disclosure to insurers. But there is an issue about the distinction of what exactly constitutes tele-underwriting and whether or not there should be some clear terminology about the different sorts of processes involved.

Bright Grey, the specialist protection arm of the Royal London Group, has picked up on the confusion in the intermediary sector and called for greater clarity in relation to the definitions used for tele-underwriting.

Roger Edwards, products director for Bright Grey, said more and more IFAs would prefer their providers to offer tele-underwriting and as a result it has become a facility the insurer is looking into introducing.

However, during these discussions with IFAs Mr Edwards said he had found that what actually constitutes tele-underwriting is not always clear to advisers.

He said: "While we have been having these conversations with advisers it has become obvious tele-underwriting means different things to different people."

Mr Edwards said: "On the one hand there are some companies that say tele-underwriting is when the IFA recommends the product, gives a quotation and then gives the telephone number of the client to the protection company.

"The company will then call the client and take in every single piece of information about them, their occupation and their health. They will drill down these health-related questions, and finally come up with a decision."

This, according to Mr Edwards, can be classified as Big T tele-underwriting.

Another alternative, according to Mr Edwards, is where the company will get the IFA to fill in information such as their client's name, address, telephone number, basic family details and their occupational details and then the company will call the client and just ask some health questions.

This, he said, was sometimes referred to as Little T tele-underwriting.

Mr Edwards said: "Some other companies will operate by asking the IFA to fill in the application form either on paper or online, and if there is anything that comes out of the health questions they want further information about they we will then call the client."

This is what Mr Edwards said should questioningly be referred to as tele-underwriting with a Tiny T. He said all of these processes could be legitimately called tele-underwriting but it was vital advisers knew what level of service was being provided to their clients.

He said: "Now tele-underwriting is becoming more important to people, to IFAs and to customers, it is better we start talking about it in a language people understand.

"For example instead of calling it Big T, call it 'Full Telephone Application', and instead of Little T call it 'Telephone Health Questioning'. At least this way everyone knows exactly what we are each offering rather than confusing matters."

Roger Wells, underwriting development manager for Legal & General, agreed there should be more clarification about the quality of tele-underwriting insurers were offering.

He said: "Now tele-underwriting is established and now it has longevity, it would be sensible for us to all use the same terminology to define the different processes."

Mr Wells said there could be confusion among advisers as to what the differences were between the differently named processes.

He said: "If we do an analogy of the medical reports that are collected as part of underwriting, they are collected from the customers but also there are two basic types. One is a general practitioner's report and the other is a targeted report, so the terminology is clear and each do exactly what it says on the tin."

Mr Wells said the same system should apply to tele-underwriting.

He said: "It has worked for the medical reports and it should be able to work for this. I think clarifying it is a sensible idea, I am not sure exactly what the best titles are, but I am quite happy to follow Mr Edward's ideas."

Other major protection providers including Lifesearch and Norwich Union also believe it is understandable advisers to get confused by these definitions.

Michael Whyte, chief underwriter for Norwich Union, said: "Perhaps we should have different, more transparent names for the different types of processes rather than lumping everything under the tele-underwriting bracket."

Matt Morris, policy adviser of protection intermediary Lifesearch, said: "I feel that some kind of standardisation in tele-underwriting would be good."

The Association of British Insurers believes it is important for intermediaries to be kept updated on developments and that each technique is fully explained.

Jonathan French, assistant director of media relations for the ABI, said: "As far as we are are concerned, what Bright Grey's Mr Edwards is saying is correct.

"The thing is that tele-underwriting is a relatively new phenomenon and companies are innovating in this area on a daily or weekly basis. They are refining their processes so that the customer gets a better, quicker, and smoother service and that is, of course, in everyone's interests."

While there is this innovation and constant change in this sector, it therefore must be made known to advisers what exactly each process offers on a regular basis.

Mr French said: "Where companies are using these tele-underwriting techniques, where they are refining them and altering them and changing them, it is our expectations these companies explain the changes to the intermediaries who are going to be dealing with those processes or at least explain to their customers what those processes are."

As for there being any specific industry guidance, Mr French said it is too soon to place guidelines on an area that is still in flux.

He said: "It has been suggested by some there needs to be some industry guidance. We would say it is far too early to go down that road at a time where there is still great innovation in this area.

"As long as companies explain to intermediaries and clients precisely what their own tele-underwriting techniques are, there should be no need for any rigid industry guidance.

"The most important thing for the adviser is to establish the best product for their client, then the type of underwriting used will be incidental to that."