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“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.

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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! 

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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.

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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.

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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.

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