Has Life Underwriting Gotten Tougher in the Last Few Months?

bill3173 · 01-21-2009, 06:55 AM

Over 80% of my cases have been fully underwritten since I started, but I don't remember having so much trouble getting cases approved or declined as I have in the last few months.

Sadly, this coincides with more unsolicited requests for life insurance, than I've ever had.

I have cases that have been pending for over 3 months, and with one of them, the carrier just sent me a request to explain a doctor's visit the man had as a teenager, that wasn't clear in the records.

As it turns out, he was being treated for something simple, but it wasn't clear in the records from 1975. They got their answer and it was like oh, okay, just checking.

I've done a lot of impaired risk, in fact, at one point, that was my focus, but this stuff lately is really strange, because these aren't even real impaired risk cases.

xrac · 01-21-2009, 07:05 AM

Originally Posted by bill3173

Over 80% of my cases have been fully underwritten since I started, but I don't remember having so much trouble getting cases approved or declined as I have in the last few months.

Sadly, this coincides with more unsolicited requests for life insurance, than I've ever had.

I have cases that have been pending for over 3 months, and with one of them, the carrier just sent me a request to explain a doctor's visit the man had as a teenager, that wasn't clear in the records.

As it turns out, he was being treated for something simple, but it wasn't clear in the records from 1975. They got their answer and it was like oh, okay, just checking.

I've done a lot of impaired risk, in fact, at one point, that was my focus, but this stuff lately is really strange, because these aren't even real impaired risk cases.

This is outside of the realm of insurance may provide ancillary evidence. The approval rate by GE Capital on retail credit applications for once chain of auto repair shops went from an average of 53% to 17% in December. I know this for a fact.

Joe Moore · 01-21-2009, 07:44 AM

Originally Posted by bill3173

Over 80% of my cases have been fully underwritten since I started, but I don't remember having so much trouble getting cases approved or declined as I have in the last few months.

Sadly, this coincides with more unsolicited requests for life insurance, than I've ever had.

I have cases that have been pending for over 3 months, and with one of them, the carrier just sent me a request to explain a doctor's visit the man had as a teenager, that wasn't clear in the records.

As it turns out, he was being treated for something simple, but it wasn't clear in the records from 1975. They got their answer and it was like oh, okay, just checking.

I've done a lot of impaired risk, in fact, at one point, that was my focus, but this stuff lately is really strange, because these aren't even real impaired risk cases.

Bill,
We have seen the same thing, even in Final Expense smaller policies. We had a lady yesterday that had a heart stent placed in 2002. The company had to have the exact date of the procedure (10/03/02) before they would issue the policy. The question was: "in the last 5 years....". Just the 2002 date was not acceptable.

I believe it is just a reminder of who is in charge.

somarco · 01-21-2009, 07:50 AM

I can neither refute or substantiate your observation since life insurance is not my primary line. I have noted a tightening in the health side which may or may not track over to the life side.

I can also tell you carriers are under tremendous strain right now. I would expect ratings to decline as carriers are audited.

The decline is asset valuations will be reflected in their reserves. The carriers will need to beef up reserves before they can really ramp up for new business. Many carriers reserve differently for higher risk business vs. standard risks, mostly due to the way their reinsurance agreements are structured.

I expect you will see a continued "tightening" until the market stabilizes and the carriers get a solid value on their reserve assets.

Of course the market response to the inauguration was not promising . . .

SportsNut · 01-21-2009, 08:24 AM

Originally Posted by somarco

I can neither refute or substantiate your observation since life insurance is not my primary line. I have noted a tightening in the health side which may or may not track over to the life side.

I can also tell you carriers are under tremendous strain right now. I would expect ratings to decline as carriers are audited.

The decline is asset valuations will be reflected in their reserves. The carriers will need to beef up reserves before they can really ramp up for new business. Many carriers reserve differently for higher risk business vs. standard risks, mostly due to the way their reinsurance agreements are structured.

I expect you will see a continued "tightening" until the market stabilizes and the carriers get a solid value on their reserve assets.

Of course the market response to the inauguration was not promising . . .

You hit the nail squarely on the head Bob... These u/w issues are not really u/w issues in most cases, but efforts to slow down issuance of new biz until there is asset stablization. Ins Co portfolios are up in the air as to quality of investments and mkt value... to put it mildly.

As example just yesterday State Street Bank (who is a bank not an ins co), got their azz handed to them yesterday to the tune of a 6.3 biln dollar loss due to fixed income investments. STT had a 59% drop in one day... Unheard of. The significance of that is...? What do ins cos predominantly invest in...? Largely into fixed income investments. Sure, there is a great spread with quality of the underlying issuer of the fixed income, but the problem is that the baby is being thrown out with the bath water of late.

The outlook by most companies financial today is as if they are in slow motion, awaiting some clarity as to stability. There just seems to be little of that for now, and hopefully it doesn't get worse. In the mean time, they wait and see... and sit on applications so as not to expand contingent liabilities in the event that covering losses and reserves becomes more difficult going fwd. There you have it.. no doubt an edict from the financial side of the co to u/w... no issue is the order of the day, it seems.

dgoldenz · 01-21-2009, 10:05 AM

This trend will continue with tougher underwriting standards - a case which used to be preferred plus is now preferred, a preferred case is now standard, etc. Carriers will be increasing rates, reducing guarantees (like no-lapse ULs), lowering interest from current rates, and increasing COI on permanent policies. Sun Life, AXA, and Lincoln have all changed their no-lapse guarantee programs and others are sure to follow. Now is a good time to push permanent policies if ever there was one.....unless a client wants to find themselves with a more expensive product with less (or none) guaranteed coverage in the future.