Life Insurance  

Underwrite on time

Underwrite on time

In spite of a slight uptick in 2014, sales of protection products have fallen significantly over the past few years. But while insurers have focused on new product design and marketing messages, for many the application process remains the biggest barrier to sales growth.

Although it is possible to take out anything from motor insurance to an Isa in a matter of minutes, purchasing life assurance, critical illness or income protection can take weeks, especially where someone does not have the cleanest bill of health.

The nature of the information required is what proves particularly challenging. Unless someone is fit and healthy and has no issues with their family history, insurers will want to find out more details about any medical problems they might have. This can mean further questions and, in a small number of cases, a report from the applicant’s GP or even a medical examination.

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Insurers have already taken significant steps to streamline the application process. The introduction of tele-underwriting, where as much medical information as possible is collected over the telephone by a trained interviewer or medical professional, has helped to reduce the turnaround time for applications as well as increasing disclosure.

Application frustrations

Even with this though, there are still concerns around the application process. Roy McLoughlin, partner at Master Adviser, says the current process can be particularly frustrating as, in many cases, the first price offered is rarely the one the client ends up paying for cover. “An adviser will search the market for the best possible price but they can look stupid if they then have to go back to the client and say the insurer wants to charge a higher price due to a health issue. It is embarrassing: the systems are prehistoric,” he says.

Part of the problem, according to Mr McLoughlin, is the price war in the protection market. With insurers keen to appear at the top of comparison tables, the price they initially quote is based on someone in perfect health. If you suffer even a minor health complaint or have a less than straightforward family history, the premium will be loaded to take this into account.

As well as causing frustrations for advisers, it also raises concerns around treating customers fairly. While the insurer may have offered the most competitive price for a clean life, throw in a variety of health issues and they might slide right down the tables. This means that, unless an adviser completes the underwriting process with all insurers, they might not be recommending the most appropriate cover.

On top of this, while there are clearly some ethical concerns around the current application process, the length of time it can take to take out cover can turn a client completely off the idea of protection. Nick Jones, brand and marketing manager at Exeter Family Friendly, adds, “Nowhere else in the world would I be happy to wait a week or more before I can buy something. Consumers expect to be able to make a purchase quickly and easily.”