When you calculate the amount of hours spent on implementing insurance for your clients it would generally average somewhere around 10 hours of work. This is taking into account the applications that go straight through to completion as well as the more complex cases that, on top of the application, may require medicals and financial evidence for the insurer to be able to make an informed decision. Some of these complex applications can take up to 40 hours of time and effort by the adviser, and not always for high-value insurance policies.
Even after completing this process, there is no guarantee that the application will be accepted or that you will be remunerated for your services unless you charge a fee for your service. Essentially, you may have just spent a week of your time doing free underwriting work for the insurer.
The other issue to consider is who bears the responsibility for the client information provided, given the growing number of claims disputes around what information the consumer provided to the adviser during the application process.
With this in mind why not take advantage of the free service offered to advisers by most insurers, which is the tele-underwriting service?
This involves your client completing a medical questionnaire over the phone, generally with a registered nurse. They will also ensure any additional questionnaires are completed if required. For example, back or knee disorders, occupation duties, or hazardous pursuits.
In the event that your client requires further evidence in order for the insurer to assess the application, the tele-underwriting service will organise for your client to have the necessary medicals, blood tests, resting ECG, and the like.
All calls are recorded for evidence in the event of a claim. This means the adviser will not get caught in the middle of a possible non-disclosure dispute, which will of course drain more time and energy from their practice.
Of course, the immediate benefit for the adviser is that by making use of the tele-underwriting service they will be become more efficient and profitable.
It is estimated that the use of tele-underwriting could save three to four hours of time. If your charge out rate is $200 per hour, this is a saving of $600 to $800 per application. If you multiply this by 50 applications there is a saving of around $40,000 per annum. And of course, the 200 hours of time saved could be much better used in developing and marketing your business.
It may be that you still want to apply the process to your client base on a segmented basis, undertaking the whole client information gathering process with high-value clients and those with complex needs, while effectively outsourcing the process for clients with more simple needs.
Either way, with the current pressures facing risk advisers the potential efficiencies from using tele-underwriting simply can’t be ignored.
David Spiteri is national risk manager at Centrepoint Alliance
The AIOFP is championing what should be the dominant issue, claim rejection. There is a quantum difference in the claim rejection stats for adviser enacted underwriting versus corporate sausage machine underwriting. An adviser adds value for the client in reducing the chance that when a claim is made that it will be rejected. For an underwriter the chance to reject a claim is a bonus to the profit bottom line. Underwriting processes via sausage machines help underwriters to reject claims. Poor old insured however is left high and dry after paying money for something they were never going to actually get.
Advisers use direct personal knowledge to advise clients of their likely insurance needs and take into account individual circumstances. The computer or call centre staff can’t tell when a “yes” is actually a “no”. They can’t look around the office or home and see if what is being said is at odds with the facts.
Underwriting should not have as its primary, or even secondary, focus “how do we reject a claim and not be held responsible?”
People who take out an insurance policy should be reasonably confident that when a disaster happens the policy will provide a safety net. Adviser assisted underwriting results in less than 1/10th of the rejections that the sausage machine does.
OnePath and the two other insurers that have copied their computer/desktop based quoting and e-app software only offer tele-underwriting if you lodge the application using the e-app, which is useless if you go to your client’s home/office to have your appointments and don’t use a laptop. I had one BDM suggest I complete the paper form and then input the data into their e-app so i could use tele-UW. Not sure how that increases my efficiency….
I also agree with Risky at Heart re losing control. The times I’ve used the service have resulted in additional work for me that was difficult to manage.
Risky at Heart is spot on. The adviser loses control of the process. Yes there is the risk of being tied up in a non-disclosure contest, but currently I am against tele-underwriting. On the few occasions I used TELE-UNDERWRITING it went pear shaped and had to be rescued by me- no time savings there. On one occasion the nurse verballed the applicant. Again, a rescue.
Here’s a warning for those insurers who see advantage in the No commission debate. If I go to 100% fees I will not care what happens to the result of the application. If the client rejects the loading, not my problem, unless I am paid for implementation. Insurers will waste a lot of money on processing and underwriting
Its time for AMP ( apparently a declining force in risk sales ) Zurich, Clearview TAL &
AIA to break away from the bank led cartel that is the FSC and get a grip on what could happen to their business if 50% of IFA advisers depart
I could not disagree more with the premise of this article.
Risk mitigation is not a sausage factory business.
Clients are gold, insurers treat them as numbers, so knowing the client is of paramount importance for them in the process of recommendations and implementation.
Why wouldn’t the adviser want to know everything about the client and manage matters which come up in the process?
Why wouldn’t you want to be able to discuss and reassure your client in the process to reach a satisfactory conclusion?
Why wouldn’t you want to go through the extra medical requirements like q’res and pre-position your client for possible outcomes?
Why would you sit in the dark and allow the insurer to offer their terms without question, because you don’t know your client so you can’t bat for them?
Why would you hand over the MOST important goal in this business – a close relationship with your client – to “a nurse” ?