Steve made some very good points about the time available to make a good impression on an underwriter, which may mean the difference between standard and decline (okay so the difference may only be standard to +50 extra mortality). Any reader can tell Steve’s insight into how insurers work comes from his fundamental training as an underwriter. Unfortunately he left that profession for the more financially rewarding world of sales.
I would like to bring Steve’s numbers up to date since the cozy environment of underwriting as perceived by the hard working financial planner/broker has changed somewhat. As we enter the year 2000 underwriters work about 200 days in a year (the balance go to training, bathroom breaks, exotic seminars and conferences, holidays, weekends occasionally, long lunch hours, and psychic leave of absences, etc). Being less than generous they toil for about 8 solid hours per day and each of those hours has 60 minutes. That culminates in 96000 minutes of extreme pressure filled minutes to handle the proverbial “X” number of new applications. In Steve’s days of underwriting the net number was the same but the conspicuous consumption was more impeding to work day frustration.
Companies today have different expectations for number of cases per underwriter per year or per day. The higher the premium and/or sum assured the lower the expectation. Complex joint lives written for estate protection require more time than the mortgage protection policy for a small townhouse. Therefore in Canada we have underwriters who have a yearly case load of 1000 and some who have a caseload of 4000. Lots of the former but no examples of the latter comes to mine (more reassurance on former than latter).
In the case of the 1000 new cases per underwriter a case gets 96 minutes on average in the focus of the underwriter. That is lots of time to read financial statements for the past five years, six attending physicians statements, two medicals, one treadmill ECG, two laboratory test results, and the occasional well written descriptive letter from the broker. A little over an hour and one half to pass judgement on what could be the culmination of 12 months of effort by the broker. Less than one sixth of a working day to say yea or nee to the brokers best customer and many mortgage payments. That’s $60.94 plus burden rate to be forever classed as an obstructionist or a real team player.
In the other extreme of 4000 cases per year we have 24 minutes per case, less than one half hour, less than $20.32 per case or not much time at all.
Automation is helping move many cases through the system. If the broker/agent has properly and completely filled in the application and the person reviewing or inputting to a machine makes no error the decision is made in nanoseconds.
Steve the 7 and ½ has to be updated unless you count the cases screened by machine or simplified issue. The point however remains the same regardless of perspective. The very first impression can make or break a potential policy application. Just think how complicated and outrageously convoluted it gets when that same underwriter has to use some of their 96 minutes to arrange for many reinsurance underwriters to grasp what the sale is for and agree that the case is a standard risk!