Posted on

“The Reinsurer Made Me Do It”

What a difference three decades makes in this industry that now sells investments with a side of life and living benefit insurance. Just focusing on one aspect like reinsurance, as I am want to do since 38.5 years of my 40 years in the business was wearing a reinsurance moniker, shows a humungous change. From the closet of obscurity or the fortress of solitude to the brunt of all risk selection criticism. From the quiet instigator of new products or supplier of surplus risk cover for the junior insurers to the ratchet vehicle for lower prices (read as lower mortality assumptions) and the glad recipient of risk when assets and investments were more fun for insurers, reinsurance has changed. No one has been as confused as the broker/agent who now lives with the echoing clarion call of “the reinsurer made me do it!”

Continue reading “The Reinsurer Made Me Do It”

Posted on

Struggles With Risk Selection

(Make them disappear)

This Article was written in mid 2008 at the request of the editors of a magazine called Pravartak, the Journal of Insurance and Risk Management. A bit short as compared with many of my articles. Underwriting and its issues are so universal (be they the supply of top senior underwriters, the training of new underwriters, the communication between advisor and underwriter, the regulatory changes or the evolution of medicine) that articles, speeches and opinions are relevant in all insurance locales. The article was published in Volume III Issue 4, July-September 2008.

Learning to love the underwriting process or, at the least, learning to survive that thing life and health insurers do called risk selection! Just how does the financial planner and/or life agent get comfortable with the categorization of clients into the super good, better than average, non-smoking leftovers, smokers and really impaired lives? How does the underwriter get comfortable with the sales concepts of distribution, the whining of agents who feel oppressed by the arbitrary nature of risk of selection or the inability of agent to gather all the information both financial and medical from the applicant the first time? Surprisingly you, if you are the agent and the source of all sales, are not alone as even the neophyte rookie unblessed underwriting candidate struggles these days with learning the “ropes” of what has become a very complex subject. It is all about communication which by definition includes speaking and listening. As I wrote many years ago (this subject of communication or lack thereof between underwriter and agent) is far from new and far from being a problem limited to the Indian market. Just read “Two Hymn Books” at .

The question asked by both those in the distribution channels and those trying to manage a new business process, which includes underwriting, has recently been answered by a company called LOGiQ3 Underwriting Solutions Inc. which tries to bridge the information chasm. This independent company stepped in to provide almost a mediation role in getting one underwriter (in the head office) to understand the other underwriter (agent in the field). Thus, for the underwriter to look to other markets for solutions is like looking at a shooting star and making a wish. No market from Canada to South Africa, USA to Great Britain, Hong Kong to Australia and so on and so forth has ever built solid communication between the two underwriters. I use the word underwriter for the agent as well since, in history, they were the first underwriters and are still the first line of risk selection an insurer has!

The increased interest in helping the agent or financial planner, in order to help themselves or their assistant prepare a case for underwriting, has grown tremendously. From asking questions and recording answers in a way to fast track issue to helping construct the covering letter for the most complex of medical and financial protection sales, those connected to any form of distribution want to know “how do you do that?” In Canada today it is common to hear an insurer say they are declining and/or rating as much as 20% of the applicants who cross their desks. Many an MGA has stated to me that close to 22% of applications are rated or declined. When the CLHIA kept statistics on such things up to a decade ago the number was less than 10%! This is the business that better communication can help the broker with through better preparation and case deployment. In addition to those obvious cases relegated to the bottom draw there are those large sums assured where wrestling with the underwriter to make them understand the need and justification is almost becoming an Olympic sport (possibly before women’s ski jumping). Ask many a great underwriter and they will say the case is often lost in the first instance an underwriter opens the file. Swelling the 80% placement ratio to more like the old days’ 90% represents a very large premium that currently does not reward the advisor. There are thousands of applications out there tht need more attention starting with those who did all the hard work to find them and get a signature on the application, perhaps and most likely after months of hard work.

India is no different than the rest of the insurance world in that communication skills for underwriters fall far down the on the list of qualities one looks for in underwriting talent. By their very nature the inquisitive sometimes introverted underwriter is a reader and closet doctor who would rather make a diagnosis than a sellable underwriting decision. I see no difference in the personas of Indian underwriters than I see in Canadian underwriters. As an industry we do not help the underwriter learn the skills of communication other than how to answer the phone with those opening pleasantries dictated by human resource departments. No where is the underwriter exposed to the much needed skills of communicating opinion in a nonthreatening fashion or making the agent feel in their mind and heart that they just experienced a quality decision which is both prudent and right.

Dressing up a diabetic case in the important facts to make it look like it really is and give the risk taker comfort that they know what the risk is can be accomplished with agent’s being taught how to build a file to support the application. To avoid issues at claim time how does the advisor cajole the right answers to each and every question from the applicant in a form that gives the risk taker (the home office underwriter is the bastion of risk selection) a broader tolerance in his or her action. What is trivial and what is not? What is helpful to differentiate your good hypertensive from the other advisors poor hypertensive? The answers are both through managing the information gathering process and “telling the story” when the story needs telling. Being forthright can be contagious and once the underwriter sees the information is forthcoming without aggravation they are on the agent’s side or should be.

In the book “Again, Does It Make Sense” by yours truly, there is the very real example of the multimillion dollar case that would never have made it through the underwriting process in tact if it had not been started with a great explanatory letter to the underwriter — insurer and reinsurer wanted to get the case issued for the amount applied for! A wise and entrepreneurial company works with agents one on one to get cases front and centre and then eventually through the process. The new philosophy in modern insurers is that it is very rewarding to train the agent on how to get some of that lost commission into their bank account and bring the satisfaction to the agent of having truly helped those some of us would say are the most in need.

In the 12 years just past I have had the great good fortune to visit India and see it take a giant step from single life insurer to multiple insurers and of course the ever present reinsurers. The change was meteoric with a stampede to get licensed, get staff, get product and get sales (not necessarily in that order as sales most likely raced far ahead of trained and qualified staff). With a lack of sufficient numbers of local experts, India imported the experts from other countries but with that importation of ideas and expertise came the baggage of past failures and lessons failed especially in communication. My first visits after the expansion to many insurers had me asking the questions of underwriters “Does your company train you in communications and dealing with agents?” The answer was an emphatic no! I was not surprised because none of these companies’ foreign partners practiced communication skills in their own markets. “Does your company train the agent on how to “sell” a case to the underwriter with detailed and forthright information both medical and financial?” Again the emphatic no since that skill in the overseas markets has all but disappeared. It seems bad habits are as easy to import as good habits.

With sales piling up on desks and there being no shortage of willing salespeople eager to hit the streets in soliciting overdrive, why waste time training them and underwriters to build strong relations through communication? Even the actuarial talent hardly knew underwriters existed and three “straw polls” done four years ago in Indian insurers showed no actuary admitted they had ever taken the time to communicate with underwriters on product pricing and margins. The underwriter was left to guess where and when to shave a table or two of rating. Thus I saw a failure to communicate both in the field relations and in the head office relations. How can an underwriter expect to do their job of categorizing risks without knowing the pricing foundation of those rate classes? We will worry about that when sales flatten and time permits. As an outsider sales will not flatten for years and years and thus the chasm will grow wider between the underwriter and the field agent plus the pricing actuary as they restructure prices to accommodate non-smokers and the super healthy (preferreds and super preferreds).

I was naïve in thinking India would be different and fundamental insurance education, both in technical knowledge and sales competency, would be different in India. You have thus far emulated the foreign practices of focusing on new sales, which is great as I am a believer in growing fast and furious, and foregoing building both internal and external communication avenues that negate lost sales and argumentative discourse between agent and underwriter. Perhaps unlike other insurance markets the effort will be expended sooner rather than later to bring sales and risk selection onto the same page as partners in growth and profit. The Indian market is tremendous in reality and potential and I reiterate that having seen the changes over just a decade I wish I could experience more of that exposure since growth is far more fun and rewarding than the contracting industry of North America. In the interim I have to be satisfied with the rare visit to a vibrant market that will be in many ways unique but in others will carry the same baggage as the rest of the insurance world.

Ross A. Morton, FLMI

Reassurer Advisor Mentor

Posted on

The Other Underwriting (There are more than medical risks)

An advisor I have a great deal of respect for, Lawrence Geller, asked me if I would write something about underwriting for the magazine produced by and for advisors. I think it will be published in June 2009. I was unsure what to write but tried to hit various points that were raised as current issues — although many of the issues between advisor and underwriter fall into the “eternal” category. It was fun to write and I wrote it between games of the IIHF World Juniors 2009 in Ottawa.


It is probably a stretch to say both advisor and underwriter understands the impact of illnesses or disease on longevity and mortality. Arguments rarely erupt between these two combatants, sorry partners, as all can recognize the individual with two heart attacks and poorly controlled diabetes and hypertension warrants an additional premium. There may be some debate on degree of extra mortality as the advisor argues that the applicant’s attending doctor says the individual is doing alright (but never alright compared to any normal baseline!); whereas, the underwriter knows the individual is highly substandard in comparison to the healthy insured population’s standard mortality pricing.


 This paper will not try to bridge the gap in the definitions of normal or standard medical assessments but rather try and lend some insight into how the underwriter thinks when assessing those other factors that actually are many and varied, yet rare and statistically short changed. Nor do I want to be labelled an iconoclast for what will follow but admit some past actions may have already nurtured that label over the past 40 years.


Aviation, avocation and occupation have traditionally been the broad headings over a multitude of influencers of potentially extra mortality. Show me 1000 coal miners in China and I will show you gross extra mortality. Show me 1000 snorkelling swimmers and I am pressed to find any extra mortality. The three broad headings today have given way to the broader catch all called “lifestyle underwriting”.


The exposure an individual exhibits in answering our insurance questions can influence their chances of producing mortality beyond what my actuarial friends have assumed in their pricing. Our premium pricing structure today is so thin (absent any real margin for anything but standard risks) the underwriter cannot admit someone who may influence adversely the normal expectations because they and those similar will have extra mortality over time. Our premium rates used in Canada or USA are such that they reflect what we expect mortality of hundreds of thousands of individuals at various ages but in good health (insurance medicine standards) to behave like which is far different than the mortality assumptions used in many other countries. The world has different mortality rates even before or without insurance selection. If in doubt that Canadian mortality is better than Haiti just go to the World Health Organization web site for statistics. The reasons are many and I assume most of the readers appreciate why but if not I have a remedial seminar on the subject.






Suburban Canadian City It Is Not!


First I will be really upfront with the reader and state that in my personal opinion the industry over reacted to the whole notion of foreign travel and thus came down extremely hard. There was almost a stampede of upward price surcharges or outright denial of coverage for various foreign travel and most of it was based on fear of the unknown not statistical analysis. The underwriter did not know what they did not know and thus rushed to say no (in its various iterations). At the same time the advisor groups, at least the Canadian ones, fell silent on the subject but encouraged individual advisors to whine and “bitch” that insurers were truly unfair in their actions. South of the border the advisors mobilized, as only they can, and quickly got the legislators to tell insurers you cannot do what you are doing without proof or sound reasons why you are discriminating against those with casual travel to far off places. In the end we in Canada suffered years of whining and verbal onslaughts of criticism, both ways. Why we all did not work together to find a solution still flabbergasts me.


In the recent history of risk selection we have moved on and now, almost in totality of an industry, endorse far more liberal thinking when it comes to foreign travel. The basic yardstick (metre stick for the more modern) is to look at the duration of travel and where. First with the latter we are still going to decline or rate those going to places like Iraq, Afghanistan or any other “hot spot” in the world. The definition of a “hot spot” is pretty well any country that is listed on a government web site (Canada, USA, UK, Australia, etc. but not Iraq or Afghanistan’s web site) stating DO NOT GO THERE STUPID or words more subtle! Western nations warn travelers for a reason — it is not safe either in a country or a region within a country and the degree of warning reflects an ever increasing cause for concern.


Business travel (as long as you are not an armament salesperson) or vacation travel for periods of up to eight weeks is deemed acceptable today to most countries as the “no no” list has shrunk. Why eight weeks? It is better than four and not as uncertain as twelve but there is no magic in its choice. Just accept it as fair and better than four. Okay? Even though we have broadened our list of acceptable eight week travel destinations it still can bring extra risk to any traveler. I was in Mumbai on routine business travel when explosives went off and terrorists ran around all too close to me than I really wanted. Was I in danger? Yes, as airplane delay made me 20 minutes shy of one explosion and all I saw then was the bomb’s residual damage. No, in that the local staff that I was travelling with made sure this “big Westerner” was very quickly (within 2 hours) escorted to the safety of a well secured small boutique hotel well away from any terrorist or at least we hoped that was the case. Should I have been rated if India was a travel destination on my insurance application? No but if I was doing a lot of it (remember more than eight weeks) I should have been rated some extra premium as I did (do) present an extra risk while travelling away from the friendly Canada. In Mumbai the underwriting profession indeed lost one underwriter in the Taj Hotel as her room was next to the terrorists. That Hannover Re underwriter from Kuala Lumpur who travelled little was just in the wrong place at the wrong time for an event no one could have predicted.


The underwriter, although not fluent in the nuances of every countries’ standard of living, economy, legislation, accident rates, endemic status, political stability, security standards or terrorism ranking, assimilates all they and their peers know and access the same public web sites to determine if the destination is good or bad. Actually in reality they look at a dated list of good countries and bad ranked by somebody we all hope understands more than continental North America. Thus you as the advisor submitting the case gets one chance to influence the mind of the underwriter and that is right at the start when the file is first opened. Write the note that explains the situation (they will find out anyway and proactive is better than remedial prodding) so the underwriter has a favourable mindset before the file is dissected. Underwriters are human and thus can be easily influenced by good clear prose be it brief or extensive. The business man going to Mumbai can be painted as standard (within the 8 week rule) but forget trying to coerce the underwriter into taking the arms dealer going to Iraq even if they are heavily armed!


The underwriter and their company worries about all the previously mentioned issues in a country as well as one other important item namely claim adjudication and management. The various standards of legalities when it comes to getting a death certificate or hospital report is immense and many an underwriter in foreign countries have said anything is obtainable within hours for modest fees! Our industry has numerous historical rip-offs of phoney deaths and faked disabilities. The cost of uncovering the truth is immense in both time and money. Our policies are issued and administered on the assumption what we see is true and accurate from underwriting information to claims papers.


Many a time the underwriter sees a case that needs to be issued “by Friday as my client is leaving for “x” country and needs the policy before leaving. Give me a break if you the advisor had been doing your job the insurance would have been inforce for months if not years. Underwriters including the author hates those cases and is suspicious it is just cheap travel insurance or there is some hidden agenda making the insurance of utmost importance all of a sudden. Give me a break and do not submit the last minute application with threats or pleadings attached. I am not moved.


Obviously the underwriter would decline any application where there is no insurable interest (it says to do so in the manual) and thus suspicions are ripe and the odour is pungent. Underwriters will decline if the country or the person presents a high security risk like politicians, diplomats, government liaisons, public figures, missionaries (they are a zealous lot who tend to feel invincible to local crime or disease) and military. Additional benefits attached to the policy are most likely decline as the claims adjudication process would be cumbersome if not impossible. Exclusions are used but are not the answer in my opinion unless they have a clear meaning and have a sunset clause so the insured is not penalized for life for something that is as acute as travel hazards — Iraq may become the new Vietnam when the Americans are finished!


In summary if the travel is more than eight weeks or the country is not as safe as Canada I am going to charge the applicant more to cover the extra risk just as if they were a resident of that country who is already paying more than the Canadian life insurance consumer. Mortality and morbidity rates vary by country and the more the applicant is exposed the more premium I need to make up the difference from the average Canadian who does not travel beyond the Disney World adventure parks or the Big White ski trails.


The whole travel issue will slide into relative obscurity until another significant world event scares us out of our drawers and we over react. Write the note or letter as cover sheet. Make the applicant “real” in the underwriters’ eye and glean some sympathy which may lead to a more lenient result. Expect bad places to incur the wrath of the underwriting pencil (key stroke today) and if it does then mobilize to argue vociferously as a group to get fairness you may feel would otherwise escape you.


Advisors Are Standard, Explosive Handlers Are Not


When I started in this business a great deal of time was spent by research underwriters (those who built the great underwriting tomes called manuals) looking up the reams of statistics on the most obscure jobs. Once the statistics were collated, manipulated and summarized our industry was left with an ever increasing list of jobs yet with fewer of them being considered hazardous here in North America. When we added nuclear scientist to the list we rated them a few extra dollars per mil but soon realized the hazard was trivial and even a group of 1000 exhibited no measurable extra mortality or morbidity. Remember I am talking North America here and do not profess to believe other countries had the same safety standards as we do in North America. To keep advisors happy we never took an occupation off the list since there was always one advisor who would ask about the rating on a blacksmith even though for a decade or more they had been considered standard. Thus many of the  lists of occupations includes ancient trades long since forgotten by many.


There are few occupations that warrant ratings these days in North America. The same cannot be said for other jurisdictions where the death rate in some industries like mining, construction and bridge building are beyond anything we can fathom in North America. Thus one could argue that today in this market we only rate those occupations where the risk is greater because either the exposure risk (off shore fishing and oil drilling) or the specific hazard like explosives adds elements to the risk that most workers are never exposed to.


Do we have statistics? Yes there are bodies like the workmen’s compensation that keep data but it is sadly lacking in its size or specifics to accurately give the insurance industry precise categories. How many people died of asbestosis that were never recorded as such as they were treated and or died in small town hospitals far from the mines themselves and the watchful eyes of government agencies? The most comprehensive survey of occupational deaths and accidents was the old 1959 study which has long gone into the waste basket once it was not kept up to date and horseshoes were seen as standard risks.


The advisor should really take the time to explain any unusual occupation to the underwriter giving as much information as possible especially in regards to the safety precautions taken in such an industry that can negate an underwriter’s potential negativity when the occupation jumps off of the application pages. It is so very rare to rate an occupation today it catches most underwriters by surprise especially in life and critical illness underwriting and less so in disability underwriting where the duties of a job play an important front and centre part of risk classification.


Crazy Things Fools Do


If you are going to submit an application on someone who practices B.A.S.E. jumping I am going to join all underwriters and decline the foolish individual. If you submit an application on the amateur skier skiing the greens, blues and blacks I will get the standard stamp out quick. Avocations are varied, misunderstood, poorly regulated, lacking statistical compilations of who does it and what happens to them, and ill defined in many cases. In addition some of the avocations are so rare and poorly defined the underwriter has only their own basic knowledge to judge its significance.


If you are submitting an application with any unusual avocation you had best attach a well constructed questionnaire completed with all details plus or instead of a letter that paints that happy face all over the application. To expect the underwriter to understand ballooning (we had an underwriter die in recent years while partaking of her first ever balloon experience) and then decide between standard or decline and all the options between based on your explicit “yes” answer to the question elaborated with the words “goes ballooning” is at best an indication of feeble mindedness! You have to explain as fully as possible and where applicable paint a picture why your applicant is better than the average partaker of the avocation..


Give the underwriter something to work with by elaborating under the following broad headings:


  1. Where — locally or out of country. Safety standards are seen as better here than there. Big hills or little mountains. Deep water or YMCA pool. Backcountry and out of bounds versus the greens at Collingwood.


  1. Who with — is it practiced alone or with instructors and guides. A group climb or solo? Was the applicant trained?


  1. Regulated — bungee jumping is fun here but in Peru it is downright scary and thus falls into rating class of stupid. A countries attitude to safety precautions is big factor. Is there a regulatory body overseeing the avocation?


  1. How often — did it once on holidays but may never again. Do it regularly and will do it more often in future.


  1. The picture — make it seem less of a risk or that your applicant is saner than the average thrill seeker.




The list of avocation is long but the following are a few which allow for some cryptic comments and suggestions:


    • All terrain vehicles — the casual user of an ATV at their cottage or home is not the worry but the ATV rider in competition is and the variable is where, when, frequency, etc. If the person is still riding the three wheeler they are dumb as they were outlawed years ago. Ratings vary from standard to decline.
    • Auto racing — how fast, how often, size matters a lot, location all play a role in determining the rating. Declines hit the formula one driver and other racers using alcohol (in the gas tank) or nitro are close to decline. There are times when the $15 per mil is used on Indy or formula drivers but mainly by reinsurers who think they know more than insurers. Weekend drag racers of stock cars without the alcohol come close to standard. If the applicant has a bad motor vehicle report or there is criticism of alcohol or drug usage they will be declined.
    • B.A.S.E. jumping — if you are so infatuated with jumping off of buildings, aerials, spans and earth to the point you are breaking the law I am going to decline you. In some jurisdictions they have outlawed BASE jumping just to protect the stupid thrill seeker.
    • Soccer and football and other ball games — generally standard but as the person approaches professional level the attitude of the underwriter turns to being suspicious of lifestyle issues.
    • Hockey — other than concern with eating without teeth its standard.
    • Mountain Climbing — show me the mountain and I will decide. The higher and the steeper the grade plus the location will influence the underwriter to move from standard for the mountain walker to the Everest climber. Trails are safer than rock faces. Ice climbing is right up there on the decline column so wait until it thaws. If you paint a great picture of a very healthy man or woman who has prepared for years to climb Kilimanjaro I want to issue standard. Show me the pudgier hypertensive dentist who on a whim wants to climb Kilimanjaro and I want to decline until they are back pulling teeth.
    • Parachuting — amateur club jumping in Canada is generally around $2.50 per mil but for competitive jumping and/or no club is most often declined or excluded.
    • Diving — for less than 40 feet of depth and recreational only diving it’s a standard. As you go deeper or more frequently or even professionally we get closer to decline. Declines are rare and ratings tend to top out at $7.50 per mil.
    • Back Country Skiing or Out Of Bounds Skiing — there is a reason areas are labelled as out of bounds and the fine print saying do not go there as it is too risky. Those boarders and skiers who like to push the risk and thrill to the highest are presenting extra risks. The very infrequent “heli” skiing or “cat” skiing is generally standard but as the frequency goes up and regulation/oversight goes down the rating goes up tot eh $5.00 per mil. As I write this article two more skiers/snowboarders have died in BC as they went “out of bounds” and pushed their luck in search of the extreme high.


Although statistics are weak on most avocations since rarely do we have any real number of participants or all reported fatalities and injuries, the underwriter and actuary assigns an extra risk in terms of deaths per thousand. If the rating is $2.00 per mil the insurer is expecting based on all reasonable assumptions that there will be 2 extra deaths per 1000 participants/insureds with the same risk factors. The more organized the avocation and the more it is regulated the more likely the statistics will have substance and less of a guesstimate. IF the advisor wants to have a better guesstimate made by the insurer than paint the picture of why your applicant is better than average and that includes more ‘cautious” than average.


With any of the avocations, and for that matter occupations and aviation, any lifestyle criticism or health issue will exaggerate the assessment the underwriter makes when culling through all the information. The bad driving record or alcohol criticism will influence adversely the assessment. Medical issues like moderate to severe depression or a seizure disorder will definitely warp the underwriter away from the standard assessment. Exclusions are an answer but how well are they worded and has one ever been tested before? Even the longstanding and often altered (read improved in the eyes of lawyers but perhaps not the underwriter) aviation exclusion has to my knowledge never been tested in the courts. It should be seen as a last resort by both the underwriter and insured and their advisor.


Plane Crashes


They happen. The one area of extra risk associated with nonmedical factors that has been based on statistics is aviation. In North America we have for years had plausible statistics on pilots be they students or commercial, infrequent or frequent (not the Aeroplan kind), and location. Crop dusters flying extremely low under the pressure of time and cost along with remote arctic charters or unscheduled routes are all seen as having the most extra risk associated with their activity.


Has there been a year we have not seen a small plane go down and all perish in locations like the interior of BC or the remoteness of the high arctic. Private pilots flying up to 75 hours per year are seen as the most standard whereas flying at or near the 300 hour mark warrants an extra of about $3.50 per mil. Once well beyond the 300 hour mark a pilot is seen to present a more significant risk. Not sure why as I would have thought practice makes perfect and keeps the proficiency up to high level.


Once again if you add in lifestyle issues or medical impairments all book ratings are out the window and declines or exclusions become the answer of choice for the underwriter. I remember flying in a four-seater out of Regina one  cold winter night and smelling alcohol on the pilot’s breath and  worrying for 90 minutes whether  or not we would ever make it to Lethbridge or not. Given the winds, the extreme cold and dark of night perhaps if I was the pilot I too would take a shot for the road! When the pilot asked if I could hold the rudder stick (or joy stick?) while he checked the map I knew I was on the wrong plane at the wrong time under the wrong conditions. My reward was a church dinner and a duplicate ride home. Paint the picture of the happy family man/woman with a successful and full life lacking any mood swings or depression and I will squeeze standard for many a pilot. I like the look and feel of a cautious insured not a reckless thrill seeker or a morose bankrupt.


Speaking or at least writing about statistics let me leave you with the following 10 year history (1998 to 2008/Nov) of plane ( nine seats or less) crashes (source was the Globe and Mail November 22, 2008 paper page A11) and almost all had fatalities:



Province/State/ Territory


British Columbia










North West Territories








Newfoundland & Labrador


New Brunswick


Nova Scotia


For reference New York


For reference Idaho


Total Canada





That is 25 per year or for the actuaries 25.7 crashes per year in Canada! Trying to tell an underwriter that all flying is safe in Canada is a waste of time. Picking the safest pilots is not easy so the advisor painting the best picture wins (includes who maintains plane, where kept, instrument ratings, location of routes, why and with who). In BC remember it is safer to take to the train.



Toking Just A Little


I am old and from a different generation. It was an absolute that any admitted use of marijuana was a rateable offence since it was an illegal activity and it led to brain cells being abused. At least that is what are parents told us. Today since the parents are toking as much as their children the occasional use of recreational marijuana is seen as okay. Actuaries (how else do we dream  up the fantastic premiums now charged the super preferred risk) and  underwriters are into it as much as any other  worker so we have moved the bar from zero tolerance to “occasional, recreational, or “while at a party” use is absolutely acceptable. Start moving away from that standard to the daily use or having a harder drug history or psychiatric medical issues or any other lifestyle red flag and the rating pen comes out. The underwriter quickly jumps to the $2.50 to $5.00 per mil range with almost any provocation but much prefers to just decline the applicant whose lifestyle overall is such that the risk or just the uncertainty of the risk is too great to accept.


Summary In Its Brevity


I cannot state enough that only the advisor can paint a picture of a better than average risk, a better than average bungee jumper, a better than average pilot, a better than average toker and an overall better than average avocation, aviation or occupation risk. If you do not paint the picture first the underwriter is often left with a Picasso in their mind and a rating on the tip of their pen or stroke of their keyboard. Be proactive and write the covering letter or note to start the case of on the right footing or struggle with the ramifications of a biased underwriter.


I am not alone in encouraging the advisor to step up and make it easy for the underwriter to appreciate the better risks within a group that is considered overall more prone to accidents both tragic and debilitating. Karen Orozco in her article in Manulife’s “Risky Business” pages in November 2007 stated the following:


“The outcome of any case will depend on the information provided with the application. For sports and avocations, we have questionnaires that provide the underwriter with the information required to underwrite the case. For larger cases, it is important to provide the questionnaire, as well as a very detailed cover letter explaining your client’s involvement in the activity, their level of expertise and experience, affiliation with any clubs or associations and a general lifestyle commentary.”


Posted on

HOLUA/IHOU Then, AHOU Now, and What Tomorrow?

The following was written for OTR magazine as a response to Hank George’s article. I wrote it hoping the good old days when the OTR was full of point and counter point from which many of us learned that not everything is as it seemed. We learned from the verbiage thrown back and forth that was without edit and censorship. The freewheeling articles, letters, notes and short novels were the best part of OTR in some readers (underwriters) opinions. Alas, this attempt to respond to Hank’s article even though Hank himself thought it should be printed, fell to the axe of make changes, shorten it up, make it less personal, etc. Okay I get it. I will just put it out there on my web site.


Every On The Risk crosses at least one of my desks and it barely has time to relax before I glance through it, tear out what I think is important to me and then I recycle the rest. As all that lovely glossy paper falls into the recycling bin I perpetually wonder why glossy paper as there is not a centre fold or an exotic car gracing the cover. I read what I think is both practical and relevant to the day to day operations of the underwriting department. I wonder who ever sees some of the esoteric impairments that some learned type has researched. I will have to work another 40 years in the insurance business just to say I have seen the impairment/disease/affliction and know what to do with it other than to ask the medical consultant. All that said I digress as usual from the task at hand and that is to write an additional tome or at least a note as an adjunct to Hank George’s recent article (see page 38, On The Risk, volume 24, n.4, 2008.


Hank and I have been on different sides of many issues in the underwriting spectrum and although we have sparred at a distance we have never drawn swords to settle any debate. The pen after all is mightier than the sword. It is just like the decline can be mightier than the standard in its devastation. After reading Hank’s (he allows me to call him Hank) article I admitted it was indeed thought provoking. AHOU and its functions have grown out of the spirits of both the HOLUA and IHOU plus their co ownership of the infamous “Joint Education Committee” (JEC).  As with any history the story of that emergence and reincarnation has never been well published (yet) and today’s neophyte underwriters know little and perhaps even care less about how did we get to where we are today. Thus to even contemplate moving forward and looking at what is the next transformation necessary to keep AHOU current those secret few who chart the course should know that the course so far has often strayed.


AHOU has surpassed many of the expectations the last generation of underwriters had for it but it also failed in one main objective. When the JEC died, after being abandoned by many of the underwriting leaders of the era, many stepped out and expended their energy into a LOMA course upgrade. The stubbornness of many JEC members to cling to ancient ways was a spectacle to behold. Once forced to admit their ways were wrong a strong and vibrant education course emerged and remains at least to today a beacon to which a fledgling underwriter can climb upon. No longer is the material 30 plus years old. No longer are the exams so terribly constructed the student often failed through frustration not lack of knowledge. Another day the words will reflect how only through chastisement and abandonment did today’s ALU ascend to its educational prominence. I see that as the goal or mission of the pre AHOU organizations. Once the road was set in direction it had to follow that the two bodies would merge into one. Personal biases, personal entitlements, narrow minded zealots and humble followers had to get passed their personal desires and then voila we have AHOU.


Hank lays out thoughts on AHOU’s mission and I would just add that to me and the many who have long since closed their last case file the one shortfall in what has been stated is that we really have not made underwriting a profession in the eyes of many other professions within the financial services domain. Education should have been a means to an end. If the ALU is the gold standard for underwriting and there was to be no “grandfathering of the ancients” why have we not after all these years made it mandatory for an underwriter to have the designation FALU? Instead, and the reason for public snickering, leaders in any company can anyone they want an underwriter. Instead we made two classes of AHOU members hoping that compromise makes some underwriters more professional than others. Did it work? No. Education standards that are rigorous, consistent and current should have been the means to an end and the end being professional status at the table of financial services. Thus as I circle Hank’s thoughts I see professionalism as the mission and education and the rigor of standards as the tact to get us (well you may not want to carry me along) there.


On to Hank’s next point about spending a “bundle” on the feel good speaker and asking for the rest to pay their way. Hank is right on. When I have given speeches or partaken of many a panel for the SOA or CIA (not the spooky one) my airfare is paid and there is free registration. Why do underwriters not have the same format for expenditure? If someone is good enough to prepare as a presenter why not pay their way. If the conference agenda and speaker profiles are good enough you can charge appropriately. I do like some of the motivational speakers though as it gives me new jokes to transpose as my own when in front of audiences in Edmonton or Mumbai. Hank, dare I say it,  is right on when he says this focus of cash outlay on one at the expense of many may be old school in today’s harsh realities. If location draws I say go for the Vegas and stay clear of Fargo. If the program is full f holes and fails to attract an audience the saving grace is that the coffers are swollen and the executive can live the good life for another year.


AHOU missed an opportunity to show it was not a “provincial” entity and understood the role of pioneers  when it failed to recognize one of the world’s best medical directors and author of the world’s best tomes on underwriting. Dr. Brackenridge lived underwriting. He wrote more than perhaps the rest of the world combined. His books are legend around the world. IF you are going to court to prove a point there is not better text to lay at the table of judgement on the importance of an impairment than one of Brackenridge’s books. He should have been awarded the “Lifetime Achievement Award” first or second or third and moved down the pecking order those who subsequently received it as I am sure whoever chose them saw their merit and jut missed Brackenridge’s. He has left this world and perhaps left the need for more accolades to adorn his eulogy. Sadly we as an industry lost a great opportunity to collectively honour a pioneer and superstar. A little transparency as Hank states would go a long way in making the cynics become believers in the process, rules governing and who it is that stand in judgement.


The large grey head office of insurance is no longer the bastion of all the underwriters and perhaps not even it’s brightest as many have fled for areas of our vast domain that encourage radical thinking and action. Hank has said enough in his assertion that where you hang your hat as an underwriter need not be those omnipresent head offices that rarely are the nurturing birthplace of change.


Hank did an admirable and sufficiently eloquent bit of prose to describe the nurturing nature of local associations and how they fit. Right on.


Transparency took on a greater importance in light of the edition of On The Risk also publishing both Krinik and Dolan’s articles on underwriters and underwriting. We should call for open nominees for all roles and leadership of AHOU. We should have a real vote not a banana republic’s rubber stamp for those who may have just known the right person. I never know in advance what the leadership stands for nor why they want the position. But perhaps it is like all politics the majority of the constituents just do not give a tinker’s ___. If indeed the candidates before us are all who aspired to the roles then state that along the lines “Before you stand the only underwriters willing to stand for office so we have to put them in their roles.” I criticize as one who has been part of the charade and in fact stood speechless as one candidate was not even given a chance because some ancients said “he never wears a tie and suit!” Sounds like a good reason to me for telling him he will not even get a chance to participate with his skill set which indeed may not have included tying a Windsor knot. I was weak in that I did not resign in protest and that still haunts my memory.


LOMA’s role to me is to do the heavy lifting of association and annual meeting logistics taking the burden off those who should not have to either take on the burden themselves in an ever busy world or the spare staff contingent to handle those same logistics. They are experts at it. It is called outsourcing.


Hank concluded in a way to somewhat take the edge off the article but to me he missed the rare opportunity to say AHOU mission is the professionalism of its members and education is a means to an end. Medical associations do not get mired in the academic world. Accountants do see their purpose as education. Lawyers use their education to lead to their professional status to help others (okay there are exceptions and everyone knows the lawyer jokes).  I would rather Hank have said it is time to take another run at true professional recognition beyond our peers.


Thanks Hank you made me write for the magazine again and perhaps they will even publish it and thus spur more debate and lively interaction amongst all factions be they the select few or the engaged minions.


Posted on

Sember Ubi Sub Ubi

Life is full of twists and turns, lessons and examples, memorable events, and the quickly forgotten. Recently, I came across an article in The Globe and Mail (much improved with the Wall Street Journal pages) that made me realize that what I have witnessed in some large companies was not unique to my eyes or sensibilities. It also made me realize I should step back and decide which group of leaders I wanted to be associated with if anyone would associate me with anything.

I will not bore the reader with a repetition of the article. Suffice to summarize it as follows. From a leadership perspective, incompetent people can successfully and expediently ascend the corporate ladder by being exceedingly proficient at nurturing senior officers. Others with leadership skills fail miserably at nurturing senior officers. Said again, the latter group, too, can be classified as just as incompetent as the former.

“Hello! Nothing new in the above diatribe,” you say. “Has Ross succumbed to altitude sickness?”

Okay, you’re correct. There’s nothing new there. However, it just points out that sometimes we have to be hit over the head with something before our minds can fully assimilate the reality before our eyes.  There were those in a previous life that tried to convince me that only I was out of step. My reluctance to join the political quagmire of office politics was looked on as a betrayal of what working is all about — keeping your job, regardless of how well the employer makes out from your employment. Some referred to it as the “me syndrome”, not to be confused with the “we syndrome”.

Big companies (100+ employees) go to great lengths to build teams, even though the majority of leaders in the organization are not and never will be team players or team leaders. Organizations like Outward Bound caters to the phenomenon labeled as team building. They do a “Marvelous, simply marvelous!” (didn’t Billy Crystal say that?) job of getting all the senior execs to paddle a canoe or climb a mountain through co-operative expenditure of energy. People have a good time, laugh at the foibles of other peers, get down and dirty, and accomplish something memorable — at least until Monday, given the living of this legend started on Friday (Monday brings them back to reality).

I was asked two questions after my memorable near-death experience with this outdoorsy frenzy. The first question was how it felt — you know, “Tell me how you really feel?” The second question was, “What new leadership skills did you learn?” I erred grievously in my response. I should have learned Lesson One — give the questioner the answer they want to hear, especially if they are both a senior, senior officer and well-positioned next to the chief officer.

Those who know me well have already leapt to my answers or a reasonable facsimile. Jumping in with both feet, I replied that the day was fun but contrived, especially breaking for a gourmet lunch with imported beer and water. I also made the bold and, as I was to be informed later, erroneous response that I learned all this from Baden-Powell, first as a Cub and then as a Scout. The face of the inquisitor said it all.

The correct answer (to feather my nest) would have been that it was, indeed, a profound experience that I would treasure in my ascension up the corporate ladder. Additional superlatives were needed like, “Never have I witnessed a learning experience that so deeply ingrained leadership examples.” After all, only the truly inane and wicked of heart could raise even a modicum of criticism for the two day event that saw 50 executive officers frolic in the fall sunshine!

Perhaps Scouting should join the gurus of management hype and either sell their tremendous lessons in life or modify them into the much cherished ways to succeed without being a leader. This could be an optional route through the Scouting school of reality. At a young age, recruits and/or their official guardians could opt for the Scouting curriculum that best gives the youth a foundation for corporate success.

Are there any natural leaders in the insurance industry of either persuasion (politically astute or naturally a rallying point for aspirants to lofty positions) — leaders who not only guide their companies but steer the industry? Who out there is unpretentiously sought after as a spokesperson for all companies?

In my days of full hair, I remember seeing and hearing key people from the upper echelons of insurance speak boldly and spontaneously about the what’s, where’s, when’s, whose and how’s of industry. At the same time, the whole industry applauded these spokespersons who were so on the mark. Today, it is the hired gun, the lobbyist, who speaks up for the association of companies, but not without getting the blessing from those who control his salary.

The historical leaders gave the semblance of spontaneity and the essence of untethered strength. Was this because of their self-confidence and the traditional security of their status both as CEO and as a stalwart of the industry? I think so. Today, honest and spontaneous leadership for the grand old institution of life insurance must be tempered by referrals to legal pundits, public relations gurus and meetings to secure recorded support. Otherwise the would-be spokesperson can be ostracized by the insurance community, or worse still, be quickly replaced at the helm by the first mate or, even more commonly, by the `outsider’.

Honest, sincere and quick response can often lead public sentiment and outside scrutinizers to believe in your message. Honest verbiage often disarms the inquisitor (usually in the form of the media) and antagonist (often special interest groups). It can backfire but I believe that in a corporate setting, time rewards the voice of integrity.

In fact, as I experienced in my 10th grade of education, blatant honesty can occasionally be so powerful that it removes the threat of reprisal for an innocent error in judgment. I was deeply immersed in the boredom of my mandatory Latin class when the hormones of my teenage body spurred me into an act that, even today, my closest acquaintances and I find far out of character for the farm boy from Harriston. Sue (not my beloved spouse, Sue, but another), sitting in front of my desk with a button undone on her blouse (buttons at back, before you get too carried away) seemed to get the devil in me to do wrong. I impulsively and irrationally reached over and pulled the bra strap, let it go and smiled at the ensuing twang.

The mild mannered Latin teacher quickly concluded from my sanguine complexion that I had done something wrong. However, he had no idea what perpetrated the twang. Foolishly, or just plain naively, I blurted out the answer to his question, “Mr. Morton, what did you do to disrupt the class?”

At that moment, the class was abuzz with what had transpired. Yet my answer did not generate a further response from my Latin teacher. I even escaped without a trip to the office or a detention.

My direct and unfettered response was so absolutely honest and probably so shocking that my teacher thought it must be something less in nature. He did not want to follow up the answer to ascertain its validity for fear of the embarrassment that was rising in him, too.

The lesson in that Latin class was that truth is sometimes so powerful that it rolls over those who are its recipients. What I had said was that, “I pulled Sue’s bra strap but I don’t know why I did it.” This was tantamount to pleading temporary insanity today. The sharp slap from Sue was all the justice meted out to me, but it had quickly returned me to my senses.

This lesson was reinforcement by something my mother always said, “Sember ubi sub ubi.” In truth, she didn’t use such antiquated language but rather the farmer’s wife version. Strange how such a simple statement can remain imbedded within one’s mind for so long while all other arcane Latin was knocked out of me by Sue and time.

Will our insurance industry see a leader of celestial proportions emerge in the difficult years ahead? I hope so. As I look at CEOs around, I have some reason for optimism. Scouting, Latin and my Mom taught me to be prepared and that I am. Just as I am prepared to wait for the leader to cement our industry into a new institution able to meet the demands of the future. The Globe and Mail can carry its stories on leadership types but we will have to wait and see if it runs a profile on the leader we need to carry our industry beyond its current status.

Remember what my Mom always said. Her words may pay off, even when you are being examined in a hospital. Your Latin is a little rusty, too? O.K., sember ubi, sub ubi simply means always wear underwear. This was important to my Mom who was also a nurse. You never know when you will be caught with your pants down.

She would have added the appropriate “clean” sub ubies if she had known the Latin word.

Posted on

Canadian Institute of Actuaries (CIA) AGM 2008

The miscommunication between actuary and underwriter ranks right up there with the disconnect stemming from communication screw ups between advisor and underwriter. This session with the counter point being supplied by a young actuary tried hard to explain that the two sides must talk. We tried to show why they must talk. We tried to show how previous decades of only mythical communication had hurt our industry. Why some actuaries appear to see communicating with underwriters as almost demeaning has never made sense to me. The reluctance of underwriters to stand up for their opinions and their value has become common place regrettably. The session had some fun to it but there was a message buried in the rhetoric. Did anyone leave thinking they would change they way they interact with the expertise within underwriting? I doubt it as they rushed to lunch and or the next session. I wonder if they rushed off to discuss the impending investment meltdown.

Download File

Posted on

Cooperators’ Agents – Red Deer 2008

I had the good fortune to be asked several times to present to the Cooperators agents/advisors in regional meetings. Each time I thoroughly enjoyed meeting the heart and soul of our business as represented by Cooperators distribution forces. They ask challenging questions and do not settle for casual answers. I was impressed at how eager they were to understand who is taking risk. Who sets the rules for underwriting? Why reinsurers are so dictatorial (a misconception perhaps fuelled by passive risk appraisers). The talk covered everything from “soup to nuts” (you can decide on who were the “nuts”). The passion and loyalty of the distribution teams matched the same passion and loyalty of their new business staff in Regina. Speaking to any part of Cooperators is always valuable to me and the company is one of the few in the world that has solidarity of purpose in all its disciplines. A favourite company for sure.

Download File

Posted on

ICIRM 2008

Curacao in May is not as great as Curacao in January for a Canuck! This risk management meeting had attendance over 100 and represented various disciplines within claims and underwriting, from leaders to adjudicators. I started my travels with Caribbean adventures as an M&G traveller spreading the gospel of underwriting and reinsurance from the Bahamas to Guyana. The opportunity to return to the region and bring them up to date on reinsurance was a highlight of the year. The world is changed so greatly and I tried to get this audience into an aggressive mood to take on the reinsurers who they felt were being inconsiderate of their current issues. Pushing back against the very people who buy you meals, take you golfing, buy your sports tickets and in general just stroke your soft spot is not easy. IF insurers, especially underwriters do not push back they will be steam rolled (do we even have steam rollers these days?).

Download File

Posted on

Advanced Underwriting China (Chinese)

A privately sponsored trip to speak to audiences in both Beijing and Shanghai about risk selection within the life and living benefit context with the side benefit of meeting some truly bright minds. The partner for the trip was the world renowned Bill Rabel of insurance education fame and someone who is really smart but also very practical. After giving a lecture on underwriting 101, I had to then turn it up a notch by doing what to the audience would be an advanced underwriting course. The audience was made up of predominantly academics (MA and PhD students studying accounting, actuarial or management skills) with lots of theoretical knowledge but a dearth of practical experience. All went well until, in both locations, I was asked if all reinsurers were corrupt! They had access to the internet and had been studying some of the recent NA fiascos with treaties and “financial reinsurance”, those cleverly constructed deals that are harder to unravel than modern plastic packaging.

Download File

Posted on

India — The Benefits of Underwriting

I have been to India 8 times and find the people eager to assimilate as much knowledge as possible. They want to be great underwriters, claims’ adjudicators and insurance leaders and thus are very inquisitive as to what worked (we have had some success) and what did not (we have had some blunders) in NA. In this emerging market of new entrants into the Indian insurance market the underwriter is fighting to be recognized as a necessity within the insurance industry. As they clamour to acquire self sufficiency in underwriting they are adding new staff faster than they can train. The number of experienced insurance pros is limited so any chance to spend some time with an old timer like me is appreciated (I do like to be appreciated). The audience of actuaries and underwriters needed to hear why great underwriting can compliment a great sales force while insuring prudent decisions make the pricing actuaries look like true geniuses. Never did get the 2008 speeches completed as the terrorists got in the way and I got out of Mumbai.

Download File