Annual Healthcare Conference
Quickly, Safely, The Challenge Of Modern
Underwriting
Warren Copp: Chief Underwriter - Scottish Re
Mike Taylor: Head of Underwriting and Claims - Axa
ƒ Changing ways to select risk
ƒ Electronic Underwriting
ƒ Teleunderwriting
ƒ Impact on risk selection
ƒ
Teleunderwriting – A solution?
ƒ Tough underwriting
ƒ Early 1990’s
ƒ Income Protection 80-100% GPR
ƒ Critical Illness – 50-70% GPR
1

ƒ More/better information from customers
ƒ Less intervention at underwriting stage
ƒ Income Protection 30-40% GPR
ƒ Critical Illness – 10-20% GPR
ƒ Greater reliance on claim management
ƒ Media
ƒ Telephone and on-line
ƒ Carrots
ƒ Customer service - STP
ƒ Costs – human versus computer
ƒ Scalability – electronic underwriting
ƒ Sticks
ƒ
Customer service - GPR delays
ƒ Costs – GPR costs
ƒ Delays/Cost
ƒ Omissions/“Half a story”
ƒ
Expert summary of medical history
ƒ Provide detail on disclosures
ƒ Identify non-disclosure
ƒ
The Benchmark
2

ƒ Ongoing pressure to develop:
ƒ Medical screenings
ƒ Para-medicals/pharmacy screens
ƒ Electronic on-line underwriting
ƒ Expert systems
ƒ Tele-underwriting
ƒ Specialist staff/expert systems
Impact on risk selection?
ƒ
Undiagnosed medical conditions
ƒ
Exams
ƒ Doctor
ƒ Paramedic
ƒ Pharmacy
ƒ Tests
ƒ Cotinine
ƒ Lipids
ƒ HIV etc etc
ƒ Generally low “hit rates”
ƒ Smoking 5% non-disclosure
ƒ Drug use in younger lives
ƒ Improve “hit rates”
ƒ GP exams
ƒ Reflexing – positive impact on cost/benefit
ƒ Point of sale testing……?!!
3

ƒ Beginning to make underwriting “instant”
ƒ Interactive questioning
ƒ Reduce % of GPR’s for disclosures
ƒ Additional benefits
ƒ Scalability – reduce risk of operational stress
ƒ Consistency
ƒ
Data – evidence-based development
ƒ
Significant reductions in non-disclosure
ƒ Data still emerging – parallel studies
ƒ Why?
ƒ Removing salesperson influence?
ƒ The “White Coat effect”?
ƒ
Improved audit trail – call recordings
ƒ Use of customer disclosures
ƒ
Ability to take action at claims stage
ƒ Ask fair questions
ƒ Know when to ask a doctor
ƒ Reasonably attribute answers to applicant
ƒ Teleunderwriting - call recordings
ƒ Electronic underwriting – wet signatures required?
ƒ Confirmation schedules
4

ƒ Ratios of substandard business
ƒ Ratings
ƒ Exclusions
ƒ Declines
ƒ
Premium income from loadings
ƒ Quality of average risk
ƒ Optimum mix of various tools
If an insurer:
ƒ Remembers that the customer is not a doctor
ƒ Explains the underwriting process to the customer
ƒ Proves that the disclosures were made by the customer
They won’t go far wrong…..
Tele-underwriting – a solution?
Everyone’s talking about it…
…but what does it mean?
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Contents
ƒ Background
ƒ What is Tele-Underwriting
ƒ The AXA Model
ƒ Statistics
ƒ The Benefits
ƒ Market View
ƒ Future
ƒ Questions
Background
Tougher environment for protection business increased competition
“differentiator”
“easy to do business with”
Background
ƒ Appropriate risk selection
ƒ
Reduction in processing costs
ƒ SLA improvements
ƒ
Improved customer experience
6

What is Tele-Underwriting
Two models – Big T and Little T
Big T
ƒ Capture application details over the phone
ƒ Recorded phone call
ƒ Can be scripted/use data capture with nurses or u/w
ƒ Immediate acceptance
What is Tele-Underwriting
Little T
ƒ Use phone to capture additional/missing information
ƒ Recorded calls
The AXA Model
Step 1
Short app completed
(paper/electronic)
Step 4
Acceptance/Referral
Step 2
Customer contacted
Step 3
Customer interview using AURA
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Tele Underwriting Statistics
Immediate acceptance:
25%
Acceptance without the need for further evidence:
80%
Underwriting decisions:
75-80% ordinary rates
Tele Underwriting Statistics
Increased disclosure and quality of disclosure:
ƒ Recreational drug abuse
ƒ Alcohol
ƒ Smoking
ƒ Heavy petting!!
Tele Underwriting Statistics
Claims Experience and non disclosure
ƒ Industry declines 20% of all CI claims
ƒ At least half of this is due to non disclosure
ƒ Current non disclosure rate for tele underwriting at
AXA is 0%
Non disclosure only found through POS and Paper
8

Customer Benefits
ƒ Relevant questions
ƒ Less embarrassment
ƒ
Less time with sales person
Sales Representative Benefits
ƒ
Can concentrate on sales
ƒ Reduction in paperwork
ƒ
Disclosure risk passed to AXA
Distributor Benefits
ƒ Better quality of disclosure
ƒ Safe signature free process
ƒ Reduction in medical evidence
ƒ Reduction in non disclosure rates
ƒ Supports Claims process
9

A Market View - UK
ƒ All major protection writers are considering
Tele-underwriting
ƒ
Using a variety of in-house and outsourced approaches
ƒ
Shift in intermediary attitude to Teleunderwriting over a relatively short time
The Future
What can Tele-underwriting achieve:
ƒ It could ensure lower reinsurance rates
ƒ Lower rates can be conveyed back to client in the form of lower priced cover
ƒ If reduction in non-disclosure rates can be maintained, a drop in disputed claims will follow
ƒ All leading to the removal of routine medical evidence
The Future
Large Cases
Where there has been significant medical history such as Heart Attack,
Diabetes etc
Optimum value from
Tele-Underwriting if you can filter the following lives
When the automatic medical limits are exceeded
For totally clean lives
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The Future
Point of Sale Teleunderwriting
46% acceptance at POS: portals, extranet offline
75-80% acceptance without further underwriting
Transfer option
15-30 minutes
QUESTIONS
Annual Healthcare Conference
Quickly, Safely, The Challenge Of Modern
Underwriting
Warren Copp: Chief Underwriter - Scottish Re
Mike Taylor: Head of Underwriting and Claims - Axa
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