Whatever Goes Around…Comes Around The re-emergence of underwriting as a market differentiator
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Whatever Goes Around…Com mes Around
The concept of unique underwriting strength as a market differentiator and quantifiable revenue engine has essentially been absent from the life insurance brokerage landscape for several years. A decade of accelerated and at times ill-conceived introductions of unsubstantiated pricing tied to guaranteed universal life (GUL) products concomitant with broad-swath based table shave programs created an environment of underwriting neutrality. The past trends of implementing creative strategies to justify precipitous GUL pricing decreases in order to drive market share are now taboo, leading us “back to the future.” The concept of underwriting “power” as a life insurance premium driver is now being recognized by some nontransaction oriented life carriers as a realistic source of marketing prowess. Many companies whose premium growth success can be tied to large engagement/high target submissions have come to realize that top-notch risk assessment talent is a marketable production component rather than merely a necessary manufacturing cog. As permanent product parity seems to be pushing commoditization of the same and innovative investment strategies are held hostage by more rigid economic forces, the impact of underwriting performance upon market share becomes increasingly important. Although for some the phrase marketing or revenue underwriter from a home office perspective can carry “oxymoron” based qualities (mistakenly), this should certainly not be the case among life brokerage distributors. Moreover, the opportunity to build and execute upon an amplified brokerage underwriting platform may indeed represent one of the most cost-effective strategies to gain producer traction and foster new premium production in a more mundane life product world. However, in order to embark upon such a path, a commitment to the critical service principles that form the backbone of a robust underwriting strategy must be in place.
Observations More than one quarter century ago and well before GUL, Variable UL and Indexed UL strapped themselves onto the back of a lumbering life brokerage industry, underwriting proficiency and quality mortality risk management were fundamental building blocks for premium and revenue growth. Many life insurance producers were well versed in the nuances of field underwriting and connected with their clients in a manner that the Connecticut General legend Frazer Wilde once coined “Serve First.” In an environment in which life insurance products played a role in the process instead of dictating it, intellectual inquiry-based underwriting strategies often formed the foundation for both insurance carrier and BGA popularity. Moreover, the client was often connected to the insurance advisor by a cord comprised of service model strength in the form of “field underwriting,” not the most recent ledger iteration. The recent evolution of the underwriting profession now harbors risk assessment algorithms, lab scoring “knockout” pricing and streamlined appraisal processes comprised of both. In a fiscal environment laced with expense-driven modalities, such mortality pricing approaches seem prudent if not reasonable. 2
Whatever Goes Around…Com mes Around
However, such expense-based process advances also leave glaring gaps in our quest to differentiate ourselves in the most poignant area of our mission: exceptional service to our customers. This premise is particularly accentuated in that portion of the marketplace producing the most attractive premium numbers: older age clients with impactful clinical maladies. Moreover, this burgeoning segment of the U.S. population demands an underwriting skill set that is not tied to the purveyors of cost effectiveness, but rather a commitment to intellectually based research, creativity and the time to deliver on both—a marketing underwriter.
Point of Sale Underwriting A true marketing underwriter in the life brokerage distribution space is a “producer” and as such should be perceived as a frontline revenue source, leveraging mature risk assessment abilities with keen relationship skills and salesmanship protocol. These qualities should encompass but not be limited to in-depth clinical knowledge, analytical assessment skills, financial underwriting savvy, keen product knowledge and applicability awareness, estate planning and sales concept proficiency, enhanced verbal and presentation skills, carrier and product competition knowledge, and a pronounced work ethic. At our firm we have developed a singularly focused team committed to a marketing/revenue based underwriting strategy which has been branded as Risk Differentiation Underwriting (RDU). The primary objective of this unit is to work exclusively with financial advisors who recognize unique risk assessment talent as an important point-ofsale value added, rather than a corrective action plan in the face of underwriting result disappointment. By doing so, a financial advisor capitalizes on RDU as a market differentiator for their practice and a powerful means by which they can deepen client relationships. We have been privileged to have the trust and respect of many who have brought us to the table to talk with their clients about the most personal and intimate details of their lives— their health and their mortality. In doing so, the client appreciates becoming readily engaged in the concepts and data relating to his underwriting presentation and the opportunity to participate in the same—as he would in the prospective purchase of other important financial instruments. This process is particularly effective when working with affluent clients with impacting clinical conditions. The benefit realized by a well-honed point-of-sale underwriting strategy is an inherently more amplified clinical profile upon which to initiate risk differentiation. A successful RDU campaign demands meticulous preparation, intellectual inquiry and perseverance. The goal is not to change the way a home office underwriter or medical director assesses mortality risk. Rather, the aim is to recognize when a particular case exhibits qualities which are different from a more standardized version of the same risk. Execution in this arena often entails working directly with a client’s corps of physician care to amplify specific idiosyncrasies of a clinical impairment in order to favorably separate that risk from an otherwise statistical/actuarial grouping. We prompt the client’s physician to become an active participant in the underwriting process on behalf of his patient, rather than a mere provider of digitized objective medical data. As such, this work requires the RDU practitioner to be exceptional at listening, researching, questioning and engaging on multiple levels of a client’s clinical care. An example that illustrates the impact of RDU is contained in the following case study and reflects a very recent RDU engagement. 3
Whatever Goes Around…Com mes Around
The Challenge A 75-year-old woman applying for $1.25 million of UL coverage declined by several insurance carriers due to multiple falls over the past six months pursuant to possible neurological impairment. Initial clinical triage notes the client’s pre-established presence of an inverted right foot deformity, scoliosis with tilted pelvis and osteoarthritis in both knees, raising the question, “Could her falls be skeletal based and not neurologically induced?”
The Strategy Immediate discussions with the advisor begin, introducing a risk differentiation underwriting strategy. The RDU team interviews the client, gathering intimate details specific to each of the falling episodes. The client states her foot deformity and prevailing scoliosis often causes her to “catch a stair, clip a piece of furniture or snag a rug.” Moreover, she articulates that each of her falls was directly tied to the same. With the client’s blessing, the RDU team engaged her internist and geriatrician with the purpose of differentiating the aforementioned tumbles as musculoskeletal based and removing any form of foreboding neurological etiology. Upon RDU recommendation, the internist/geriatrician agreed to meet with the patient to reaffirm our assessment position and to document the same as part of the medical record.
The Presentation Upon physician review the client is not only neurologically intact but shows no underlying whole body neuro deficit whatsoever. Therefore the patient’s episodic falls are clearly understood to be mechanical in nature. The doctor agrees to produce a copious narrative, summarizing his favorable examination results and completely removing the client’s past falls as a contributor to premature mortality. With a more amplified and now differentiated picture of the client, presentation is made to one of the same carriers who had declined coverage 14 days earlier. Drawing upon the unique idiosyncrasies captured during RDU’s interview with the client, direct discussions with her geriatrician, physical examination by the internist and carrier medical director’s review of the physician narrative, this same 75-year-old woman was reassessed and approved on a preferred nonsmoker basis.
The Results RDU created a very unique and deepened relationship between advisor and client, tied to the most intimate and personal details of her life—her health and her mortality. The insurance carrier receives a more amplified and complete mortality risk that would otherwise not be placed. Due to the opportunity to “insure her insurability” the client and trustee decide to increase the applied-for amount to $2.5 million with an applicable target premium of $119,800. The popular risk assessment response to this underwriting engagement was a declination due to the frequency of neurologically induced falling episodes in a septuagenarian. However, by injecting subjective analysis to create an amplified picture of the risk, we produced a more complete risk assessment profile and thereafter, accurate mortality pricing. 4
Whatever Goes Around…Com mes Around
Summary In the last twenty-five years we have watched the underwriting profession slip into two worlds of risk appraisal: (1) a transactional commoditization concomitant with product development and (2) an adherence to the service-based principles of thoughtful inquiry. It is only now that the fundamental beliefs of “always doing the good and right thing and that the client always comes first” have we seen the beginning of a focused effort to reinvigorate the latter and in doing so a possible re-emergence of our past. Over the last several years we have witnessed sometimes differing and converging perspectives among brokerage underwriting personnel and our home office underwriting partners. On the one hand, brokerage distribution clamors “to place the case” and on the other, a home office underwriter follows pre-established risk selection protocol. What if they were the same—a mutual interest in the writing and placement of quality persistent business? When underwriting is at its best, we are able to separate the importance of how we touch our customers from what we put before them. I believe we are in the midst of an underwriting renaissance in which the “Serve First” principles of the past have once again become important elements of our industry’s financial success today. Insurance carriers and brokerage distribution entities that are prepared to embrace the same may benefit from peering into our underwriting past as a means of projecting our risk assessment future, a place where underwriting talent once again takes its position as a formidable marketing strategy and revenue catalyst. A very sage individual (my dad) has often offered me insight when faced with the frustrations of the present by drawing upon the lessons of the past, by saying, “Whatever goes around comes around, Timothy.” I should listen to him more often.
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Whatever Goes Around…Com mes Around
Timothy C. Moynihan is the Senior Vice President and Director of Risk Appraisal for Brokers’ Service Marketing Group (BSMG). In this leadership position, Mr. Moynihan oversees all BSMG underwriting/risk selection operations as well as seeks out new business development opportunities. Prior to joining BSMG, Mr. Moynihan served as President of CBIZ Special Risk, a wholly owned subsidiary of CBIZ (NYSE: CBZ). In that role, he led all risk appraisal, new business and carrier/advisor relationship efforts. In addition, Mr. Moynihan was a Home Office Underwriter with Connecticut General and Manager of CIGNA Associates Impaired Risk Division. With more than 35 years of experience in the life insurance industry, he possesses a unique skill-set utilized to differentiate mortality risks. He has extensive experience handling difficult risks as well as working with attending physicians, Medical Directors, Home Office Underwriters and clients on behalf of financial advisors and centers of influence. Mr. Moynihan and Brokers’ Service Marketing Group have introduced a dramatically different approach to mortality assessment; Risk Differentiation Underwriting (RDU). RDU is a transformational change in the way life insurance companies across the country analyze and price life expectancy. Mr. Moynihan is a graduate of Amherst College and contributor to several industry publications on various life insurance solutions. He has also been the keynote speaker for AHOU, CLU, IAFP and IRUA meetings on the subject of insurance underwriting. Timothy C. Moynihan Sr. Vice President and Director of Risk Appraisal 800-343-7772 tmoynihan@bsmg.net
Founded in 1972, Brokers’ Service Marketing Group is a nationally recognized insurance brokerage firm with offices in Providence, Rhode Island and Wellesley, Massachusetts. BSMG provides robust solutions for the sale, support and processing of life insurance, annuities and long term care insurance to financial service individuals and financial institutions. As a trusted resource and partner to thousands of financial advisors, as well as many banks, broker dealers and producer groups. BSMG assists its clients with a broad array of products and services from the nation’s leading carriers. For more information, visit www.bsmg.net. This article was originally published in Broker World Magazine.
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