Munich Re UK Life has announced it will only request third party financial evidence for sums assureds of £25m or more for business protection life cases.
The market norm currently sits at £3.5m. In recent years the UK market has made small increases in the level of cover at which third party evidence is asked for, but the type of evidence has remained consistent, the insurer highlighted.
Munich Re UK Life said the evidence requested to assess a case is exactly the same for a £4m life risk as a £40m life risk, yet the potential claims liability is vastly different.
Following internal analysis, Munich Re UK Life has extended their financial limits. Their analysis found that the decision made on the overwhelming majority of cases, where third party financial evidence had been requested, could have been concluded based on the original financial questionnaire.
This demonstrates that although financial underwriting is important, third party evidence takes substantial effort and is not significantly better than the information on the initial questionnaire, the insurer said.
Phil Brown, chief underwriting officer at Munich Re UK Life said: "For some time we have held the belief that third party financial evidence is the least cost effective part of the underwriting process.
"It rarely leads to the underwriter restricting the basis of the cover proposed and can often delay making a decision. The outcome of this analysis means we are delighted to be able to offer our key clients a market leading proposition for the financial assessment of large risks."
