A panel debate at the recent COVER Forum discussed medical disclosure application forms, with some arguing tele-underwriting was the answer while others said universal forms would beat the ever-lengthening applications. How much of a problem are existing applications and how viable would universal forms be?
Andy Chapman, chief executive, Exeter Family Friendly
One thing is sure, we have not yet solved the problem of how consumers buy protection products. We have made progress but we have a long way to go.
Tele-underwriting suits some advisers and underwriters love the accuracy, but does that make the process universally quicker,smoother and remove the need for further evidence? Not as yet.
A universal application form across insurers has been discussed in the past and would certainly help the adviser process, but is it feasible?
The problem is that underwriting is one of the factors that insurers compete on. So to remove and standardise would not suit everyone and would further commoditise what we do.
Equally, if any universal form developed looks similar to what we have today it would not transform the process.
There is no escaping the size of the task in re-engineering the buying process. We need to look more fundamentally than every insurer simply agreeing to the same thing. It is about what customers expect, what we are trying to achieve and level of risk we are prepared to take.
Equally, what information should we gather and assess? We almost exclusively assess health and history, but could we be just as, if not more, effective by looking at other factors such as postcode, lifestyle and attitude?
We are looking very seriously at these questions. If we make the advances we intend to competition will dictate that others will follow, with or without an agreement.
Rachael Tyrrell, IFA, Gold IFA
Advising clients on protection is all about adding value and making appropriate recommendations. For that reason I am not a real fan of tele-underwriting. It is leaving the client to deal with at least part of the process without the adviser's assistance.
I recognise the advantages to the adviser in that they have no involvement in disclosure and cannot have any liability for omissions which may later arise upon a claim. It comes down to being thorough and I work on the basis that if in doubt put it on the application. It may result in longer underwriting process, but the end result will be quality business.
This also opens up another area for the adviser to demonstrate knowledge. They can provide advice on the effect of any pre-existing conditions and discuss these with underwriters prior to a recommendation. Providers do vary so a client with conditions takes a little more research.
As the protection business process takes more than one appointment, I do not find using each provider's application form a problem, as opposed to one generic application for all. When returning to the client after discussing the options and recommendations a subsequent appointment is to complete the paperwork.
At the end of the advice process, my clients appreciate the difference between products,definitions and what each provider offers. They value their policies which equates to the client valuing your advice; resulting in minimal cancellations and clawbacks and more referrals.
Andrew Wilkinson, director, Moneysworth
People are living longer and with a greater number of health conditions, causing a significant increase in the percentage of applications that are rated or declined. This is why insurers are looking for more information.
But as insurance companies do not always ask the same questions; make the same final decisions; and share the same reinsurers - a universal application form is a non-starter.
Insurers should decide what information they want and from whom in order to make a binding decision.
Issues to do with the lengthening of application forms and the overall underwriting process are sometimes brought up, as though these are negative factors which prevent the writing of business and put clients off. Our experience points to the opposite.
Our service is primarily targeted at potentially rateable clients who are seeking a best possible outcome and they are far more concerned that the job is done right than quickly. For example many clients are happy for a GP report to be requested because they feel this gives them extra assurance about disclosure and the safety of the cover at claim.
Feeling that their cover is secure is key for customers and we are in favour of actions which support that goal, which generally means greater disclosure not less.
Nevertheless life companies could revisit their application forms to make them clearer and in this respect the issuing of completion guidance notes might help to provide greater clarification.
Ian Smart, head of product development and technical support, Bright Grey and Scottish Provident
The most frequent criticism of application forms is that they are too long and too intrusive and there is no sign of this ending. In some respects I agree, but I would also argue that with the price of protection at historic lows this has become a necessary evil.
It is true that application forms used to be much shorter with fewer questions about the client's medical history. But with advances in underwriting methods, the price war we have endured for many years and the cost of cover decreasing significantly, providers have had to find ways to gather more detailed information in a cost effective way.
Without this level of detail providers would not be able to get as accurate a picture of the client's likelihood of making a claim and consequently prices would be higher.
Will we ever reach the position where the industry has a common application form? Probably not. Providers need to differentiate themselves. One of the ways this is done is by tailoring their underwriting philosophy to get the business mix they need to offer competitive prices.
The variation in philosophies between different providers requires different questions to be asked by each. So while at a high level many of the questions are already common, the level of detail each provider will go into can and does vary significantly.
Being only able to ask a particular set of questions could therefore limit competition and this is not something that anyone would realistically want to see.
