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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!

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