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In a fog of data and deadlines it can be difficult to identify the numbers that really matter – and those that really don’t.

These are the things I believe all underwriters should understand and improve to be relevant to their business and to real people buying insurance.

First clear your mind of distractions – be strong and actively ignore these three high profile but too often misleading numbers:
– Straight through processing rate
– % of cases that start the underwriting process that go on risk
– Number of pre-sales calls answered

Instead get thinking and working on these seven things that define the success of your business:

1) The number of people turned away. No hiding behind a % on this one. In the UK we will decline about 75,000 Life applications and a further 25,000 CI and IP applications this year (even after some pre-sales work by IFAs). How many people who wanted insurance will you say “No” to this year? Are these decisions a) fair b) well communicated c) efficiently made?

2) Customer feedback metric. Pick one, understand it and live it. Speak to people happy and unhappy with how you treated them and learn from those experiences.

3) The amount you spend on applications that never go in force. Driving this number down is critical. Then choose: pocket the money, or reinvest those savings into better underwriting lives you are going on risk for to improve that portfolio. Either way leads to lower costs for those who do become customers.

4) New business cost per policy in force after one year. Cost per policy in force is an obvious metric to compare. But we need to take ownership of the customer experience and understand why people lapse early too. A slicker process may get more on the books but many become early lapsers soon after the blur of the sales process ends.

5) Change in % of your portfolio by condition. If last month diabetics were 2% of your new in force policies and this month they are either 0.5% or 5% you need to review what is happening in medical literature, in your experience and in the market. You may be happy to maintain your position, but you need to explain what is happening. Technological changes will mean these portfolio shifts will happen more in the next five years than the last fifty.

6) Experience by underwriting year. Yes it’s backward looking, yes it was all probably someone elses fault, but understanding the past allows you to make the right decisions to refine your future approach.

7) % of Claims contested for misrepresentation by underwriting year. Have you done enough to remove the threat of misrepresentation? Are the rare decisions to decline a claim made easier by virtue of clear underwriting questions and process?

If you know these numbers and actively drive them you will be key to building a popular, effective proposition meeting customer needs going forwards. If you don’t you will be working in the dark and risk losing out in both sales and risk management to those others who are.

3 Responses to Seven numbers underwriters must understand and improve
  1. Andrew, regarding point 1, do you know what percentage of applications across the market are declined or rated now and how that compares to say ten years ago?

    • Hi Andrew – thanks for your question.

      The latest overall industry figures would be in the region of 75% std / 20% rated / 5% declined or postponed compared to more like a 90/8/2 split in 2001. Reasons for this are too long for this reply box – and in fact would make a good future blog! In short though – the two main factors are pretty equally
      i) poorer health of UK population (in particular obesity)
      ii) the rules of the game where cheap standard rates policies = top of IFA price lists = tighter underwriting philosophy

      I would add that I don’t think we’ve reached the bottom yet – and the whole concept of “standard rates” may begin to disappear before the decade is out.

      Hope that makes sense – happy to chat more if helpful!

  2. Those scary stats support what I’ve been saying for a few years. That price competition is largely an illusion in the UK now.

    We seduce advisers and clients with cheal rates on portals and then disappoint 1 in 4 of them with a loading.

    When will it become unacceptable? 1 in 3? 1 in 2?

    It’s preferred lives underwriting by stealth.


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