Advisers warn of delays to protection business

Advisers warn of delays to protection business

The coronavirus has posed a significant challenge to life insurance underwriting, causing delays in new business completions, according to an adviser survey.

A survey of more than 100 life insurance advisers, conducted in April by NMG Consulting, highlighted delays in decision-making and challenges around obtaining GP reports amid tight underwriting practices. 

More than 70 per cent of advisers said they were "moderately to extremely concerned" about delays in completion of new business applications, while 42 per cent said the coronavirus had had a “high” impact on underwriting new business.

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Advisers were also asked to rate insurers’ general responses to the coronavirus, from resolving open questions and issues, to how proactive they were in their communications.

Flexibility and support around underwriting, such as requirements for medical examinations, was the most commonly identified area where improvement was needed.

This comes as advisers are increasingly concerned about generating new business, with 23 per cent saying they were "extremely concerned" about the difficulty in sourcing new clients.

However, the research also found that customer demand for income protection was rising

James Zhang, a principal consultant at NMG, said during the coronavirus, “life insurers face big underwriting issues – especially around medical checks – but need to work hard to remove barriers to clients getting the cover they need.

"Over the longer term, technology will play a key part here.”

Rob May, director at Risk Assured, described getting clients covered as the “biggest challenge” he currently faces.

He said: “My average client is aged 50+ and their age, combined with the amount of cover they need, usually means that a GP report must be obtained or a medical examination undertaken to satisfy an insurer’s medical underwriting requirements.

“I applaud AIG Life, Guardian and LV= who have all offered a more flexible approach to medical underwriting given Covid-19. However, I would have liked to see all insurers and reinsurers taking a joined up approach in order to better serve customers and mitigate the risk of anti-selection."

Earlier this month insurance newcomer Guardian urged the industry to be more agile when underwriting, to give advisers and clients the best possible service.

This week (April 27) British Friendly announced it had changed its underwriting processes to help advisers get cover for their clients within a shorter timeframe.

Mr May said: “Whilst Covid-19 has had a devastating impact on many individuals and businesses, I am hopeful that it will lead to positive change by forcing people and industries to address the challenges that have been faced during the pandemic.

“Medical underwriting for life and protection insurance is a key example of this and I hope that the challenges faced will prompt insurers and reinsurers to look at alternative approaches to medical underwriting going forward.”