Andrew Gething on Changing Protection Underwriting – MPAF20

Underwriting gets a good deal of bad press. But is it justified?

In the advised protection market the consequence of price competition on term assurance and critical illness products is tighter underwriting, more medical evidence and more ratings.

Online applications and tele-underwriting can help speed up the process but clients face disappointment when they find their premium is higher than originally quoted.

Is it time we changed the way we quote for protection products so we do not raise client expectations with cheap headline rates more people cannot obtain?

My guest today pioneered tele-underwriting in the UK and firmly believes that we need change. But what does “good” look like?

My guest on Episode 20 of the Marketing Protection and Finance Podcast is Andrew Gething.

Andrew Gething on Changing Protection Underwriting - MPAF20

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Who is Andrew Gething?

Andrew is founder and MD of Morgan Ash.

Before that, he was a Chartered Structural Engineer and entrepreneur starting several other companies one of which was an IT specialist.

In his spare time, Andrew is currently walking all the Wainwrights – that 214 hills in the Lake District of which he has only 22 more to do.

Hear Andrew’s views on the current relationship between quoted premium rates and the final rates we offer after underwriting. Listen to his proposed solutions on how we can change underwriting from the current sometimes painful process to a valuable individual assessment.

Andrew’s links:

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Can Monstrous Life Insurance Companies be reborn as Fluffy and Cuddly?

I like it.

The new Beagle Street life insurance TV advert taps into the perception many people have about life insurance companies.

That they are monstrous. Difficult to deal with and “a bit of a nightmare”.

But Beagle Street’s ugly Gremlin is reborn into a fluffy cuddly Mogwai look-alike offering a back rub.

Effectively saying, “We’re different,” Beagle Street hits the spot for me. It’s short, funny and to the point.

But here’s a thought.

In the original Gremlins movie they cited 3 rules to prevent the cute, fluffy, cuddly Mogwai from transforming into evil, ugly Gremlins. Don’t expose them to sunlight. Don’t get them wet. And how ever much they cry don’t feed them after midnight.

Life insurance has rules as well. Such as disclosing all relevant information during the application process. Time will tell whether Beagle Street’s fluffy approach will revert to hideous Gremlin many years down the line.

I hope not. In the meantime if you haven’t seen the advert here it is.

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Now it’s your turn:

What do you think of the Beagle Street life insurance TV advert? Is it more successful that recent financial services campaigns? Please leave a comment below and share your thoughts.

And click here to check out other classic Life Insurance adverts.

Cheap Rate Life Insurance is increasingly just an Illusion

Price rules in the term assurance market.

Compliance, the comparison engines (such as IRESS and iPipeline), and the consolidators perpetuate the notion that cheapest is best.

Cheap Rate Life Insurance

Over the last two decades I’ve sat in sales a marketing meetings and heard a similar plea from the sales teams.

“We have to be competitive”

“We’ll need to be there or thereabouts”

“Top five but average third or we’re out of the race”

You’ve heard these phrases to haven’t you? You might actually have said them on occasion.

In order to keep headline prices low, providers re-tender their reinsurance frequently, and re-adjust their prices daily.

But cheap rate life insurance is increasingly just an illusion.

Despite competing fiercely for the cheapest headline rate, providers do not actually accept all clients at these rates. Ordinary rates acceptances are averaging 75% compared to 95% over a decade ago.

That means one in four clients don’t get the rate quoted.

If you went into a supermarket and one in four of the items in your trolly was incorrectly priced would you be happy? No. You’d complain. Why is it acceptable then in the protection market?

One company allegedly only takes 65% of cases at ordinary rates. That’s even worse.

In order to charge extra for the 25-35% providers have hardened their underwriting terms and routinely gather more information on applicants, either through longer application forms with reflexive questions or tele-underwriting.

It’s a strange situation that an industry that makes such a big deal out of offering the cheapest rates, actually disappoints at least one in four of its customers in this way.

Advisers and consumers constantly complain about the lengthy process brought about by this underwriting approach and clamour for simplified acceptance. But of course simplified acceptance requires a higher headline price which does not fit with the mechanics of the industry.

And the cheap headline rate prevails.

We discussed this issue at the Protection Review Conference in London recently. The majority feeling was it was wrong. But I felt little appetite to do anything about it.

How long will it be before this practice becomes unacceptable? When providers load 50% of cases? Or 60%?

There’s an opportunity to try something different here. Perhaps to introduce a pricing system where the client has a better chance of getting their quoted rate. Or a shorter application process in return for a higher start price. Launching such a proposition would be difficult given the focus of the market on headline price.

There is at least one way we could move to a shorter application form without hiking the price too much.

But is anyone brave enough to do it? And would a market that’s stuck with the illusion of cheap rates accept such a solution?

Now it’s your turn:

Do you agree that cheap rate life insurance is increasingly just an illusion? Is it acceptable that we disappoint 1 in 4 of our customers? How do we break out of this cheap rate trap? Please leave a comment or post a link to your own article.