Do You Have FOU (Fear of Underwriting)? Here’s the Antidote!

life-insurance-underwritingThere are all kinds of acronyms on social media and within the insurance world. A newly coined acronym, FOU (fear of underwriting), refers to the anxiety associated with life insurance underwriting. FOU can be a deterrent to life insurance sales for financial professionals and for clients! Financial pros don’t want delays and complications. Likewise, clients don’t like insurance people prying into their private information. No wonder it seems scary!

Fortunately, today’s underwriting processes are not quite that bad. In fact, some processes actually eliminate many of those fears and offer several ways to add value to the client and broker relationship.

Most carriers rely on and prefer using third party services to collect the information underwriters use to evaluate the risk. This relieves agents of the sensitive aspects of field underwriting such as inquiring about health conditions and finances. Time previously spent completing a paper application, usually several pages long, can instead be used to emphasize the benefits, value, and tax advantages of life insurance, demonstrating multiple ways life insurance offers financial security throughout a lifetime.

With this backdrop in mind, below are a few steps you can take to improve your clients’ underwriting experiences:

Step 1: Set expectations with the client.

For the client, underwriting is like a black box; much information goes in and an underwriting decision comes out. You can defuse client concerns by characterizing the purpose of underwriting as the process to determine the best premium for the client. Most carriers today will underwrite for the best class possible. However, to achieve that goal, the underwriter must have medical and financial information.

Introduce the third party services carriers use to secure confidential information. The use of these services protect client confidentially, actually reduce underwriting time and are proven to provide more accurate information contributing to better underwriting outcomes. Carriers use many vendors to collect medical information, prescription history, driving history, credit scores, and financial position.

Prepare the client for the telephone interview and paramed. Many carriers prefer to have the service scheduled directly with the client. Telephone interviews may take between 20 and 40 minutes. A paramed exam is usually completed in 30 minutes or less. The better prepared the client, the shorter the interview and exam. Many carriers and some brokers provide materials to help the client collect necessary information prior to the interview, such as a list of prescriptions and the names, addresses, and phone numbers of health care providers. A well-prepared client will spend much less time on the phone and be more satisfied with the experience.

The Attending Physician Statement (APS), one of the most important pieces of medical information, often delays the underwriting process. Suggest the client notify their health care providers that a request for records will be requested. Usually the underwriter will not begin to review a case until all the initial requirements are received. Clients may be able to speed up the process if they can reduce the time to secure an APS.

In an effort to make the process transparent to the client and agent, many services and some carriers provide a secure website for the client to view the status of requirements. Others may offer access to results of tests and medical examinations. The agent usually has access to information about the progress of the application. As an added value, some agents use email to share progress information periodically with the client.

Step 2: Develop a relationship with the managing agency and underwriter.

It is often said insurance is a relationship business. That extends to relationships with managing agencies and underwriters. Savvy producers realize the sales process is not complete when the client agrees to purchase the process. Instead, the agent’s focus shifts to selling the case to the carrier.

The value of a cover letter accompanying the application cannot be overstated. An underwriter appreciates any insights the agent can offer about the applicant, his or her financial position, and the reasons for purchasing the insurance. A straightforward cover letter establishes trust and collaboration between the agent, broker and carrier. It is well worth the 15 minutes it takes to compose a brief letter. Make sure to include information about the length of your relationship with the client and other coverages the client has purchased from you. Some professionals recommend including a photo of the insured. This is the opportunity to sell the risk to the carrier and to tell your client’s story.

Managing agencies offer varying degrees of underwriting support. At the very least, the managing agency should scrub applications, reviewing for completeness of the application in general and aligning requested classes to face amount, height and weight, and age criteria. Discrepancies in these areas will add time to the process and may require additional signatures when the policy is delivered, often delaying payment of commissions. Top-tier managing agencies will offer a higher level of underwriting review. Some streamline the underwriting process even further by ordering and collecting medical requirements on behalf of the carrier. The information is reviewed by expert medical staff in order to identify medical conditions or inconsistencies that might delay the underwriting decision or result in an unfavorable decision, putting the agent in a position to consider a different product or face amount.

Managing agencies also have relationships with carriers and their underwriters. They know which carriers look more favorably on certain medical conditions. They are then in the position to advise the agent to consider a similar product with a different carrier that may offer a more affordable premium to the client.

Step 3: Use underwriting to add value to your practice.

Producers who use underwriting as a means to add differentiation and client value reap other benefits as well. Relationships with the client, carrier, and managing agency are often stronger. Placement rates are higher since reduced underwriting time reduces the risk of the client getting cold feet, and because the applied underwriting class is more closely aligned with the client’s medical and financial history. Producers also spend less time on administrative tasks and more time on client-facing tasks that increase revenue and client satisfaction.

How Can Brokers Central Help?

Brokers Central has medical and underwriting experts on staff to provide you with the highest level of underwriting service available. Visit our website to learn more about our Certified Underwriting Checkpoint Program which includes a 12-point underwriting requirements check, greatly expediting your approval and commission payment times.

Ready to learn more? Download details of Brokers Central’s Certified Underwriting Checkpoint Program.

As the Founding President of Brokers Central, Yoel Bodek has an innate understanding of how financial products work together to solve clients’ business, financial security and wealth accumulation goals.View Yoel’s Bio. Email Yoel.