Streamlining the underwriting process

Streamlining the underwriting process

A new and simplified underwriting process is hoping to revolutionise the way IFAs sell life insurance and ultimately send sales soaring. 

Life insurer Royal London has teamed up with mortgage and protection adviser L&C to develop and test a new life insurance application service called Streamlined Mortgage Protection. 

It uses advanced machine learning algorithms to simplify the underwriting journey and makes it easy for customers to buy protection, while taking out a mortgage.

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The new scoring engine collects data from the mortgage fact find to make an instant decision on life cover eligibility as part of the mortgage advice conversation. Applicants only have to answer three medical and three lifestyle questions, compared to more than 30 for a traditional life insurance application.

Debbie Kennedy, group head of protection strategy at Royal London, said the innovation in streamlining algorithms will improve the way customers can access protection cover. She added that the firm is already looking to introduce critical illness cover to the service in the future. 

She said: “We believe this development will be pivotal to overcoming one of the biggest barriers to selling protection alongside a mortgage – the time taken to complete a protection application on top of a mortgage application.”

To speed up the process further, no medical tests or evidence are required and all customers receive an immediate decision online.

It is predicted that more than 80 per cent of customers will be accepted. But customers who are ineligible are still able to apply using traditional underwriting.

Changes to the way the mortgage market is regulated has increased the time it takes to give mortgage advice. One side effect of these changes is that mortgage brokers can struggle to sell protection at the end of the mortgage sales process. This has meant that many customers have completed the mortgage advice process without purchasing protection insurance.

This was echoed by Lucy Brown, head of protection at L&C, who said: “Providing customers with a quick and seamless process, coupled with certainty of pricing and cover, can only help meet customer expectation and heighten their engagement. This will remove some of the sticking points that can ultimately result in borrowers being underinsured.”

This comes after recent research commissioned by Royal London found that 47 per cent of the 2,000 consumers polled in a survey said that life insurance is essential for anyone with a mortgage or dependents. Despite this, only 26 per cent of UK adults surveyed had taken out a life insurance policy. 

David Hollingworth, associate director at Bath-based L&C, said the firm’s IFAs have been trialling the new system since March and believe this will help close the protection gap. 

He said:  “Our advisers have said it has worked really well. What they like is that if a client is eligible then they get an instant quote, which is price guaranteed. We live in a time where customers want to have instant answers and this system provides a very slick process.