With the ABI and BMA striking a new deal on GP reports, will it speed up the underwriting process, asks Kirstie Redford
GP reports (GPRs) form a vital part of the underwriting process for protection and health insurance. Without this supplementary medical evidence, many people with pre-existing conditions - arguably the policyholders most in need of cover - would not be accepted on risk.
However, the issue of GPRs has often led to heated discussions in the past between insurers and the medical profession. Insurers have had to deal with delays and incomplete reports, slowing the underwriting process, while GPs, with their busy schedules, have found insurers demands hard to prioritise.
A landmark five-year deal, agreed in July this year between the Association of British Insurers (ABI) and the British Medical Association (BMA) over the quality and cost of GPRs aims to put these differences to rest and make the process less painful for all involved.
Insurers have agreed to pay an extra 6% each year for reports, meaning the price for each GPR will increase from £74.70 to £94.30 in April 2010/2011. In return, the BMA has pledged that doctors will fill in forms personally and accurately so insurers receive the right information first time around.
However, costs could be set to increase even further. A new EU directive means that medical services have to be directly involved in treatment to be exempt from VAT. A GP filling out a form for an insurer does not warrant such an exemption. A court ruling in connection with the directive is still being hammered out, which is why the Government is yet to confirm the new rules. But if VAT is introduced, which is looking likely, insurers will have no choice but to pay up.
Although the price increases will inevitably be passed on to policyholders, Jonathan French, spokesperson for the ABI, says that the agreement will at least help insurers plan how to absorb the costs. "The agreement means that prices will increase proportionately, so there will be no nasty surprises over the next five years. This small increase will be pretty negligible on premiums for the majority of policyholders," he says.
Mark Preston, underwriting and claims manager at Scottish Equitable Protect, is positive about the agreement on fees. "In previous years, negotiations with the BMA have broken down, so it's encouraging to have this new agreement in place. It means that everyone knows where they are in the long term - 6% may seem a lot, but in previous years it has been more. In 2003 it was 11% and in 2004 it was 8%," he says.
Incentive
French says that the ABI is hoping the new agreement will also encourage GPs to provide a better quality service. "It is in policyholders' best interests for GPs to complete reports as quickly as possible and we would expect GPs to have their patients' best interests in mind. We've asked the BMA to remind doctors to provide good quality reports on time, rather than printing off reams of medical records, which delays the process as insurers have to plough through the notes," he says.
Friends Provident recently conducted a survey to monitor the quality of GPRs and the time being taken to process them. According to Nicolette Bray, the insurer's underwriting strategy manager, the survey revealed turnaround times fell between 20 and 30 days.
More than one in five GPRs were also found to be in need of more supporting evidence. "An average of 21% of cases needed extra information," says Bray.
"In many cases, especially for income protection business, underwriters needed to know details about the applicant's physical status rather than previous medical history. So unless they had seen their GP that day, it was difficult for the GP to say in a report whether they could, for example, work due to back pain."
Russ Whitworth, claims and underwriting manager at Legal & General, backs these figures. "We have to go back to the GP for further information to clarify evidence in around 20% of cases, which in turn increases our costs," he says.
Initiative
An initiative aimed at speeding up the GPR process was launched by Marlborough Stirling - now Vertex Financial Solutions - in January 2005. The eGPR service aimed to make it easier for insurers to access GPRs by taking advantage of the fact that surgeries were taking part in an NHS initiative to transfer all patients' paper notes into an electronic format.
By providing the relevant software, Marlborough Stirling hoped that GPs would be encouraged to send the information over to insurers electronically to cut turnaround times.
Six months later and after a successful pilot, Vertex announced that turnaround times had been slashed on average from four to two weeks and to just 19 minutes in some cases. But one big problem remained - the majority of life offices and GP surgeries had not signed up.
Graham Spittles, managing director of Otter Risks Solutions, says the initiative has now reached a standstill. "Everyone wants eGPRs - the medical profession wants it and the insurance industry wants it. However, both sides are waiting for the other to sign up before they commit. They are looking at each other over the fence wondering who will make the first move," he says.
According to Matt Rann, group head of underwriting and claims at Scottish Equitable, only 7%-8% of GPs are currently registered. "My peers in the industry are saying that until 30%-40% of GPs are signed up they will not go for it," he says.
Indeed, L&G's Whitworth says that despite the insurer being a founding sponsor of the eGPR initiative, it now relies solely on a paper-based system. "We issue paper forms and GPs tend to fill these out by hand. The main problem with the electronic system was poor take-up. In the end, we actually did no business via the eGPR system," he says.
Stuart Hayman, solutions architect at Vertex Financial Services, admits that after various pilots, not a single provider is currently using the eGPR service. "The problem has been down to insufficient coverage by GPs meaning those insurers piloting the system had to run two separate systems - one electronic and the other manual. It is more expensive to run two systems than one, so insurers have pulled out," he says.
Vertex is now developing a new service that aims to solve this problem. Hayman says that it aims to deliver a single process solution for insurers, whereby even if a GP is not signed up, insurers can still request the report electronically.
So for GPs that still want to use the paper-based system, Vertex is hoping to act as a middleman to transfer the information into an electronic format and then pass it on to the insurer.
"We are still putting the business case together, but with Vertex's document production and imaging capabilities we can deliver one solution to providers. We are also confident that this system could help convert more GPs to go electronic," he says.
According to Hayman, Vertex is currently in positive discussions with major providers about this initiative and hopes to make an announcement on its development by the end of the year.
However, with the cost of GPRs set to steadily increase, some in the industry believe that the best solution is to move away from GPRs altogether. "Can we really afford to be so reliant on GPRs to provide superfluous medical evidence?" asks Spittles. "Insurers should be relying more on the applicant's disclosure.
In some cases, medical evidence is needed. Someone disclosing early onset diabetes, for example, is a no-brainer - you need a GPR. But when medical evidence is required because of the size of benefit, insurers should consider whether a GPR is the best route."
Tele-underwriting
Indeed, some insurers see tele-underwriting - where underwriters speak direct to applicants to gather medical information - as the future. Royal Liver boasts that focusing on tele-underwriting last year resulted in 90% of its IFA applications being put on risk without the need for a GPR.
Scottish Equitable's Rann names Prudential and Axa as two of the other main players in tele-underwriting.
"They both have systems whereby the IFA fills in the name, date of birth and address of individuals and then a phone operative - who can range from a clerical worker, nurse or underwriter - then asks risk-based questions. Other insurers, including us, are running pilots to see what benefits can be made and what return they can make on their money," he says.
However, not all advisers are ready to embrace tele-underwriting. "Some IFAs want to keep control and go through the questions with their clients. But others want clients' medical questionnaires off their desks so they can do four sales in an hour, rather than one," says Rann.
As well as speeding up the process, tele-underwriting may also help improve disclosure. "I have no doubt that tele-underwriting will help solve non-disclosure issues. Because of this, in 12 to 18 months' time I believe most serious players will have a tele-underwriting operation. This won't get rid of GPRs, but it could reduce the need for them," adds Rann.
The ABI's agreement with the BMA may seem a positive step for the future of GPRs. Vertex's 'middleman' solution could also spark renewed interest in the eGPR service. But it is the advances being made in tele-underwriting systems that all eyes now seemed firmly fixed on for the future.
Kirstie Redford is a freelance journalist
