An industry sea change towards less underwriting is not necessarily the best way to improve the customer ‘journey' or increase sales, writes Andrew Gething.
Underwriting is out of favour at the moment, with a fashion for simplified underwriting, simplified products, short questionnaires, and higher-priced products taking on more risk.
All of these initiatives are good in that they are aimed at improving the customer journey and increasing sales. They are, however, based on the premise of avoiding underwriting, as it inhibits sales. But we can improve underwriting and still increase sales.
Many people will cite the cyclical nature of underwriting questionnaires increasing and decreasing in size, as the appetite for risk and sales ebbs and flows and predict this will continue. While this cycle is true of the past, it will not be continued in the future because modern techniques of communication can overcome the negative effects of deep underwriting as previously used. Several areas of the protection sales process need to be changed if we are to make underwriting a positive part of the sales process:
1. The integration of the sales and underwriting process;
2. Providing a personalised sales and underwriting journey;
3. Promotion of underwriting as a personalised assessment;
4. Improving customer expectations by giving rated prices up front, rather than starting with a standard price and then increasing;
5. Engaging with the consumer.
Online systems have, of course, already provided ratings at the point of sale for about 60% of consumers for Life and Critical Illness, but there are still 40% of those consumers and all those that need IP, that are not covered by these approaches.
To provide a positive customer journey for these more complex cases we need to progress to a process that integrates manual underwriting as well as the automatic underwriting into the sales journey.
While this could be instant, it is more likely to have a short delay while the manual underwriting takes place. This is not the end of the world: it can be an integral part of the sales process.
While we had paper forms, the process had to provide a standard set of questions to every applicant. But now, as we have technology, every set of questions can be bespoke for the consumer. We already do this for gender and product with online and tele-interviewing processes, and questions are asked only if applicable.
It is proposed that this can go a lot further. For example, the information gathered can be flexed on their age, the distribution channel, if it is the consumer or an agent asking the questions, the amount of insurance required, by duration and amount.
Hence in effect we can flex from a ‘simple underwriting' to a full deep underwriting approach, depending on these many factors. We can divorce the process from the risk management.
Further, the questions can flex in accordance with the journey so far. If the consumer changes the answers, then questions to validate this change can be triggered.
The quality of the agent undertaking the interview, and if the interview is voice recorded, can both trigger different risk profiles, in line with the risk of anti-selection and non-disclosure.
Not only can the process flex for risk reasons, but more importantly to suit the customer journey, by making reference to the process so far, and predicting the next steps of the process, specifically for each consumer. Allowing them to purchase how they want, using the medium they want to use online, over the phone, live chat or email.
Individual treatment
People like to be treated as individuals, not as ‘standard'. Well, the underwriting process is bespoke for each individual, automated or manual. It is an assessment of the individual's unique circumstances, and everyone is treated as an individual.
Unfortunately, this great value is hidden by a process that treats everyone the same. Using technology, online, phone or live chat, we can manage every consumer individually and give them feedback that is individual to them. We can promote the value of this individual assessment, making the consumer feel they are being treated as an individual.
