ORGANISTION OF SOUTHERN AND EAST AFRICA ORGANISTION OF SOUTHERN AND EAST AFRICA INSURERS TECHNICAL TRAINING SEMINARINSURERS TECHNICAL TRAINING SEMINAR

LIFE UNDERWRITING TRENDS AND OPPORTUNITIES 10-12 NOVEMBER 2015

BYJUSTUS M MUTIGA

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WHAT IS UNDERWRITING – (BACK TO BASICS)WHAT IS UNDERWRITING – (BACK TO BASICS)

The process of determining the level of risk presented by the applicant and deciding whether to accept the proposal, and if so, at what terms and at what premium/price

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TERMS OF ACCEPTANCE (BACK TO TERMS OF ACCEPTANCE (BACK TO BASICS)BASICS)

Standard RatesIncreased Premium throughout the termIncreased Premium for a limited termDebt on the Sum AssuredExclusion ClauseDeferred for stated periodDecline

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ROLE OF UNDERWRITINGROLE OF UNDERWRITING

Risk ManagementDistribution ManagementExpenses Management

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LIFE UNDERWRITING CHALLENGESLIFE UNDERWRITING CHALLENGES

DisclosuresUnderwriting SkillsProcessing Hurdles

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Non disclosure and Adverse SelectionNon disclosure and Adverse Selection

Premium $2,000 p.a. Premium $2,000 p.a Underwriting is required to deal with adverse selection Exclusions and waiting periods

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Applicant Y•38 years old•No physical activity•Back pain on and off•Diagnosed with hypertension•Recommended blood test for sugarNo Adverse disclosure

DISCLOSURES IMPACTDISCLOSURES IMPACT

Low Non Medical LimitsIncrease in ExpensesClaims RepudiationExtreme Customer discomfortAsymmetrical portfolio

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UNDERWRITING SKILLSUNDERWRITING SKILLS

Training of underwriters is expensive and time consuming

Skilled life underwriters are not always available

Reassurers provide manualsComputerized systems for underwritingUnderwriting is about judgment

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IMPACT OF LACK OF UNDERWRITING SKILLSIMPACT OF LACK OF UNDERWRITING SKILLS

Inappropriate inconsistent decisionsLoss of credibilityIncreased medical evidenceHigher declinature rateLoss of business

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PROCESSING HURDLESPROCESSING HURDLES

Processing efficiently requires robust systems

Automated underwriting systems are useful but expensive.

Sound decisions are important

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THE IMPACT OF PROCESSING HUDLESTHE IMPACT OF PROCESSING HUDLES

Delay in IssuanceDissatisfied customers, and sales forceCustomer cools offReduced Business Volumes

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WHAT CAN BE DONEWHAT CAN BE DONE

Adopt a new approach because sound decisions have to be made.

Tel underwritingAutomated Expert underwriting

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TEL-UNDERWRITINGTEL-UNDERWRITING

Basic underwriting data is gathered by Tel-Interviewer

Information sent to UnderwritingDecision is communicated off-line, orUse automated “expert” Underwriting

systems

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TEL UNDERWRITINGTEL UNDERWRITING

Decision provided instantlyInterviews are done by skilled underwriters“Skilled” personal not required if expert

engines are used.

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TEL-UNDERWRITING BENEFITSTEL-UNDERWRITING BENEFITS

• Reduced no disclosure• Fewer “incomplete”

applications• Higher conversion rate• Improved customer

service• New distribution

channel

• Interview in privacy• Faster, Simpler process• No sharing of information with

sales people• Better changes of claim being

paid

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TELE UNDERWRITINGTELE UNDERWRITING

Source : SR study in US/Hank George Survey/Medicals Direct16

Did U Know?

Tele UW IMPROVES disclosure rates by nearly 30% than compared to any other point of sale UW.

More than 75% of American and European markets USE Tele-UW or interviewing in some form!

Tele-underwriting REDUCES APS medical evidence by approx. 50%?!

Tele UW IMPROVES disclosure rates by nearly 30% than compared to any other point of sale UW.

More than 75% of American and European markets USE Tele-UW or interviewing in some form!

Tele-underwriting REDUCES APS medical evidence by approx. 50%?!

Tele UW grown at a pace of 15% per year in the last three years.

UKTele-underwritten CI products non-disclosure has dropped from 25% to 7%

UK In Life products the drop in non-disclosure has gone from 11 to 4%

Tele UW grown at a pace of 15% per year in the last three years.

UKTele-underwritten CI products non-disclosure has dropped from 25% to 7%

UK In Life products the drop in non-disclosure has gone from 11 to 4%

Did U Know?

AUTOMATED U/W SYSTEMAUTOMATED U/W SYSTEM

Most automated system available do some of the following:

Identify Yes/No questionsRefer applications with non standard

disclosuresCalculate BMIUse logic based “Rules”Capable of identifying “medical conditions”

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EXPERT U/W SYSTEMS - BENEFITSEXPERT U/W SYSTEMS - BENEFITS

Faster “turnaround”Saving in hiring and training costsImproved business turn-overAccurate decisions and Consistent decisions

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CREATING AN UNDERWRING PROFESSIONALCREATING AN UNDERWRING PROFESSIONAL

Attract the TalentNurture the Talent• In-house• Reassurers• Diploma in life underwriting• Retain Talent

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WHAT ARE THE OPPORTUNITIES OF NEW WHAT ARE THE OPPORTUNITIES OF NEW TRENDSTRENDS

Shortened Proposal FormsTechnology and big dataBusiness from elderlyFuture InsurabilityForward UnderwritingField Underwriting

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QUESTIONS

• THANK YOU

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