Posted on

“Resolved: Underwriters Must Be Increasingly Prudent In Their …”

I have been part of many panels before many an audience over my four decades in the life and health insurance business. Usually a panelist is constrained from being controversial or opinionated by the ground rules laid down by either the moderator or the organization running the event. Traditionally from my recollections there have been very few meetings of underwriters where the panel is controversial, meaningful fun and leaves the audience with a message to think about. 

In 1994 George Brennan, one of a large crop of Canadian iconic underwriters who played a large role in all associations, put together a great panel (personally speaking and from memories of audience feedback) that really got the juices flowing and left many a valid point to ponder for the audience. George let the four panelists do their own thing and he did not encumber the spoken word or the venom so playfully thrown around.

Continue reading “Resolved: Underwriters Must Be Increasingly Prudent In Their …”

Posted on

Is There Life After Underwriting? ( A History Lesson Perhaps?)

I wrote the following article as it was part of a presentation I did with the great Don Frost at the January 1983 Cholua Seminar. In a recent search of my archives for background material for a book I came across the article. After reading it I felt that today’s underwriters should read it as a history lesson. Today’s leadership should read it to show that some things change for the worse — the lack of meaningful industry statistics on what is issued standard, substandard or declined. The CLHIA to my knowledge has dropped the industry stats for some years leaving an underwriting leader wondering “is my company rating and or declining more than the industry average?” Or then again who cares. 

For the past three years I have heard from many large advisors (large by size of the clientele not their waistline) and MGAs that rated cases are few and declines are many. I have even had a senior underwriting leader say it is irrelevant as the key to today’s underwriting leadership is to get the standard through as quickly as possible. There seems to be less competition be it from insurers or reinsurers for the case that is not quite standard. The last time that complacency was around there were challenges to our right to underwrite! 

Continue reading Is There Life After Underwriting? ( A History Lesson Perhaps?)

Posted on

Hate To Be Critical Of One’s Hosts, But …

I was still not convinced 100% by the end of the day. But now lets fill in the information I took away from a day with peers.

Being outside the decision making spectrum of the insurance world it is less likely that I would be invited to an industry leader’s (who services the risk selection domain) infomercial masked behind meals and golf. When asked I said yes not because of the meals or the golf (my golf game needs much remedial effort) but because the infomercial that was to be laid out was intriguing and could perhaps represent the next great turning point in the life and living benefit insurance world. I honestly and without fingers crossed attended even without the two meals and golf. The only down side to the event was that it would take up the whole day from 8:00 Am to 9:00 PM. I also wondered who from the decision making ranks of insurance would give up a whole day away from countless and meaningless meetings to attend an infomercial.

I could write a short thank you and say I enjoyed the day with the usual plaudits embellished with great thanks for the food, camaraderie, golf prices (not for longest drive or nearest pin so lets leave it at that), and anything else that came to mind when writing the Hallmark type thank you. Instead I decided to write an opinion paper on the day. I felt an urge deep within to be constructively critical knowing some would applaud the opinions while others would feel chastised for what was said or not said during the 13 hours. The following is written to constructive and yet it may end any chance of future invites to infomercials regardless of how they are dressed up.

Continue reading Hate To Be Critical Of One’s Hosts, But …

Posted on

Financial Underwriting, Why Bother?

When an underwriting historian looks at the subject of financial underwriting, they quickly come to the realization that the conflict/confusion/befuddlement in the different perspectives between underwriter and advisor has existed since days when we could not agree on the value of the inventor of the wheel as a key man! History being so out of vogue today I will skip the horse and buggy, the two great wars, the moon landing and the Cold War so I can jump to 1956. Reading the Transactions of the Society of Actuaries 1956 Volume 8 Number 21 the conclusion by many at the time was “large case mortality was excellent” but still there was conversation about financial underwriting interspersed with concerns of too much accidental death benefit riders, pressure on nonmedical insurance and the creeping concern of antiselection on cheap term products as they entered the product arsenal. Typical concerns of legendary actuaries who ran underwriting and where all real decision making was left to medical doctors. The lay underwriter was yet to be hatched although in the 1950’s there emerged an experiment to try using trained clerks to make risk selection decisions!

Continue reading Financial Underwriting, Why Bother?

Posted on

Jumbo Limits Compensating For Terrible Administration

Before most readers were born, and for those that were they were still thinking mathematics was a lucrative career choice, reinsurance played a trivial role in the life insurance industry. In Canada 0.04% (rounded up of course) of all life risk was reinsured in 1969. There was a slightly higher percentage in the USA but my notes and memory failed to enlighten me as I wrote this article. Believe it or not for you youngsters, reinsurance was a follower and minor player in the realm of life insurance risk taking. The icons of the era were insurance company leaders not reinsurance personnel. Reinsurance personnel deferred to the wise counsel of insurance leaders who were at the leading edge of pricing and risk selection. Content to beg or cajole for a mere pittance of the premium pot, the reinsurers fought each other for the privilege of table scraps if we liken the fat purses of insurers to the gluttonous meals served to the emerging obese of today. About the only worthy feature of reinsurers in the “good old days” was their research into impaired lives and the experimental risk taking they fostered for notoriety.

Continue reading Jumbo Limits Compensating For Terrible Administration

Posted on

Two Hymn Books and Two Choir Masters

or Advisors Never Refer To Underwriters As Refulgent (A Geck Maybe but Never Refulgent)

A 2011 opinion on the relationship between advisor and underwriter.

Many many years ago I wrote an article for the now dormant Marketing Options magazine (dearly missed by all while fondly remembered by writers and readers) about the conflict often created by miscommunication or no communication between advisor and underwriter. Thus, to say that the seemingly constant battle to get a life or living benefit insurance application through the mysterious and far from transparent new business department is new has not been around for long. Like most Canadians the advisor has a short memory (just look at how we continue to elect politicians who mere months prior to election screwed us royally) and the underwriter is not paid to remember so they never stored the historical perspective anyway. This chasm of misunderstanding, poor communication and lack of empathy between two integral parts to getting premium in the door to keep the life business going strong is not new but merely in an exaggerated state unseen in intensity in the last 41 years.

Continue reading Two Hymn Books and Two Choir Masters

Posted on

An Actuary, an Underwriter and a Marketer In A Boat

Okay they were not in a boat but rather on a stage in Toronto in front of a couple of hundred underwriters and those that love to hang around underwriters. It was the one part of a two day meeting that I really wanted to see and hear even though the meeting overall conflicted with other travel and client commitments. I thought it and lunch would be worth the day’s admission price. I was able to slide into the back of the room just as the session started and tried to stay as conspicuous as possible by remaining standing.

Regardless of the title they put on their presentation it was to me a chance for the three key disciplines in our business to explain why we are in the position we are today. You could say we are not in great shape or you could boast we are in great shape. It is the old “the glass is half full or the glass is half empty” comparison. I was very curious if the three would meekly state their case and slyly point the finger of blame at the other two or would there be challenging and perhaps even derogatory innuendo thrown freely. I knew the actuary and the underwriter so I did expect a feisty session. Surely someone would address the appalling state of customer service in the industry today as advisor and even customer scratches their head in confusion over the new business service experience. Sorry let me correct that since the service for the “vanilla” case clear of even a facial blemish does slide through unencumbered by restrictive and confusing underwriting  as recounted to me for the past two years by numerous advisors and MGAs.

Continue reading An Actuary, an Underwriter and a Marketer In A Boat

Posted on

Statistic Advisors Want To See

Everyone likes to know what is going on. Are our actions getting worse or better? Do we do something more today than yesterday? Are we winning more or losing more? Only the Toronto Maple Leafs know the answers in advance so for the rest of us we must seek the statistics after the fact. AS an industry insurers use to keep track of how many cases were written, how many were issued standard, how many were placed, how many were not taken, how many were rated and how many were declined. As a junior risk taker in the business those numbers helped me judge how all risk selectors were doing and at times with a jaundiced eye looked tot he advisor as the cause of an increase in declines and “rated cases”. Always lacking at least from my perspective was an industry number on how many cases were disputed at time of claim. How many were denied? How many went to litigation? How many ended in compromise? How many were paid in relation to how many were totally submitted? I always wondered but never became an information champion seeking out those numbers other than a cursory “are they available anywhere question.

Continue reading Statistic Advisors Want To See

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