David Mead, founder of Future Proof and joint head of protection at St. James's Place Protection Planning, says: “More automated processes do mean that some clients are more likely to be excluded from access to insurance, especially if they self-apply.
“When an adverse decision is delivered, it’s important for insurers to explain the rational for their decision clearly to the client, as well as signposting them to specialist firms who might be able to assist the client.”
.The more we move towards automation within underwriting, the more important it becomes to speak to a protection specialist.--Naomi Greatorex
Ian McKenna, founder of FTRC and Protection Guru, says: “The more we get to understand health and the more individuals understand their own personal future health, the more likely it is that some consumers will choose not to insure, even though the actual cost of cover for them will be very low.
“Conversely when we have a greater understanding of long-term medical risks, inevitably underwriters looking to balance their portfolios will seek higher premiums for, and in some cases exclude, those individuals who have a very high propensity to claim.”
Other challenges to the quest for innovation have emerged via the increased drive to gain access to electronic health records, which can make life easier for insurers to accurately and quickly underwrite policies.
Electronic health records are primarily driven by condition codes - a three-character code which the doctor or their assistants enter into the patient record.
A single mistyped character in a code can mean the difference between a condition that has no impact on insurance and one that is potentially life threatening, so is very significant from an underwriting perspective.
McKenna says: “[As a result of this] a growing number of protection advisers now ask their clients to obtain a copy of the medical records in advance before submitting an application in order to make sure the records are correct.
“This can be particularly important if the client does have a complex medical history.”
McKenna believes that insurance will become cheaper for those with good long-term health prospects, and as medical science advances mean we are better able to understand who represents a 'good risk'.
However, as the ability to identify high-risk individuals becomes greater, cover will become more expensive for others, indeed some may not be able to access insurance at all.