Underwriting Flexibility Gobbled Up By Recession!

Once upon a time life insurance underwriting wasn’t as cut and dried, and frankly brutal, as it is today. There was room for flexibility and negotiation and even compassion when working with underwriters.

That was way back then….about 4 years ago. Competition thrived in those days and one company would literally snatch a piece of business away from another company by offering a better approval. It was great for the customer. It ripped their case right out of the textbooks and put it on the block for the most aggressive underwriter to win.

I’ve talked about this shift before that came when there was a great consolidation of re-insurance companies, decreasing the number from about 20 to the present day 6. When there were 20 there was real competition between the “re’s” and if you didn’t like the answer you got from one, there was generally another that would fill the order for you. Sounds a little risky on the surface, like maybe insurance and re-insurance companies were offering rates lower than they should have been, but that really wasn’t the case.

Mortality risk and experience was still the driving force behind all approvals. Underwriters weren’t going out on fractured limbs and putting the risk pool in danger, but the competition was alive and healthy.

Now with the recession and the new economic belt tightening, insurance companies are a little less likely to go that extra rate class to win a case. They aren’t, because of the small number of re-insurance companies, likely to do much outside of the re-insurance manual guidelines unless they are within their own retention limit.

So, is all lost? Do we have to accept all decisions as final? The answer is no. It is tougher than it used to be but what I’ve seen is that underwriters, while not as likely to cut slack for anyone that asks, are still willing to discuss and negotiate with agents who have proven themselves to be worth their trust over the years. A case that kind of drives home what can still be done is one I am wrapping up now where a client with bipolar disorder went through another agent and got a table 2 approval. The client read one of my blog posts and called to see if I could do better since I had more experience with bipolar.

I shopped the case and got a standard trial offer through the same company that had approved him a table 2 through the other agent. I was able to negotiate, after reviewing all the records, a new approval at standard. They didn’t really go out on a huge limb. They just allowed a review and a reconsideration. Good company.

Bottom line. The tighter things get the more important it becomes that you choose an independent agent with the experience and knowledge to get the job done and get it done right the first time.