Our thoughts

Distribution is a key to success in any business. And in few more so than life and morbidity risk insurance, where, classically, products “are sold, not bought”. Historically life companies have been supported by brokers with varying degrees of independence and/or armies of agents, either directly tethered to the carrier or working for tied distributor firms. While other distribution channels have been available, face-to-face dealing has mostly remained the source of mainstream life and morbidity product sales. In some ways, the classic model has proved remarkably durable. But change is in the air. And even in markets where the direct…

The benefits of underwriting engines are now well understood (or they ought to be). They help drive down cost and bring a variety of other benefits such as detailed management information that in turn can be applied to distributor management and segmentation, customer targeting and reserving requirements. But classically engines are expensive tools, and small insurers understandably blanch at the need to spend hundreds of thousands of dollars in purchase of the license and set-up costs, followed by maintenance fees. And there is the need to maintain and develop the engine’s knowledge base to keep it in line with any…

Do you ever hear people say that what the industry needs is a concerted campaign to publicize the value of life and disability insurance generally or heighten awareness of individual products such as disability income or critical illness? They point to the prevalence of under-insurance and how the market is struggling for growth. If consumers were more aware of these products, understood how they worked and realized what good value for money they represent, they would want to find out more and become new customers. It’s an appealing thought, and even if life and disability insurance has been classically ‘sold…

In our last article we looked at the use of calculators and worksheets and the publisher of Underwriter e- Alert noted: The article begs the question: How will attorneys for plaintiffs litigating against insurers treat inconsistent practices within the same insurance company relative to the use of an e-worksheet or calculators for self-retained business versus reinsured business? Also, despite the free market basis of competitive underwriting and pricing, some level of professional standards (consistency) ought to exist in the application of debits, credits and pricing via the use of e- worksheets and calculators. Otherwise, courts and regulators will view underwriting…

Supporting the underwriting process A slick process is crucial to any successful business but to what degree can underwriting manuals fit in with key processes and how can they integrate with other systems such as automatic underwriting engines, workbenches, knowledge management and back office systems? How does the manual tie in with any automatic underwriting system? Well for sure the automated system needs to reflect the current philosophy contained in the manuals and this needs to be properly coordinated. But sometimes it is not that easy as the manual may be changed with little notice. In SelectX’s rules engine survey…

In 2009 we wrote three articles on developing and maintaining underwriting manuals (a subject SelectX is close to given our experience of creating and maintaining a number of manuals over the years). Time, then, to look at some current issues. Keeping the manual up to date A manual is not a ‘launch and leave’ project and can quickly become out of step with changes in the wider environment such as: Legislative changes (for example the forthcoming restrictions in Europe on gender in risk pricing) Product changes such as improvements to critical illness definitions; because these usually widen the cover being…

Previously in this series on underwriting manuals we have considered: Maintaining and resourcing a manual Issues of access, security and usage Training content, and A supporting evidence base. In the final part of this trilogy we look at the use of calculators and consider possible future developments. Calculators The use of calculators to produce a decision is growing in popularity. But does the use of a clever ‘black box’ reduce the need for the traditional skills of the experienced underwriter? Or is there a place for both art and science in the underwriting process? A number of manuals now feature…

In part one of this series of articles we considered maintaining and resourcing an underwriting manual. In this second part we look at how access rights are granted and managed, how manuals can work as training resources, and consider briefly the hot topic of evidence-based ratings. Access On the Web, a manual usually has secure entry because the owner wants to protect its intellectual property. It wants to deny non-clients the benefits of its efforts and to avoid competitors downloading material, benchmarking ratings and plagiarising content. Secure entry also means that the producer can analyse usage, enabling a sharper focus…

Here we consider some of the strategic dilemmas faced by those companies who produce and maintain underwriting manuals. Manuals have been around for many years, first as paper manuals, then on floppy disk and CD, although now almost all are on-line. But where do they go from here? The creators of these reference tools (often reinsurance companies) face a number of dilemmas in terms of where they take them next. What is important is to have a well considered and documented strategy for the manual that fits not only with the underwriting strategy but corporate strategy too. Important questions to…