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Process: Into the footlights of performance - innovations from the UK and Ireland Dave Nicholas Chief Underwriter. Agenda. Agenda. Overview of the UK Overview of Ireland Innovations in Underwriting Innovations in Claims Conclusions Questions. Overview - UK. Overview - UK.
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Process: Into the footlights of performance - innovations from the UK and IrelandDave NicholasChief Underwriter
Agenda • Overview of the UK • Overview of Ireland • Innovations in Underwriting • Innovations in Claims • Conclusions • Questions
Overview - UK • ‘07 – Banking crisis • National debt = £1.347 tn (Q4 2012) • 88.7% total GDP • Annual servicing cost = £43bn – or defence budget • Increasing £2.3bn week • Eurozone – biggest trading partner • Feb and April ‘13 – downgraded from AAA • Narrowly avoided triple dip recession • Austerity, low growth, high inflation
Overview - Ireland • ‘05 = best quality of life….in the world! • First country in EU to enter recession • Banking / property crisis • 2nd highest level household debt in the world (190% household income) • National debt 117% GDP • ‘07 growth 4.7%, ‘09 -7.1% • 3 years negative growth • Downgraded ….twice! • Emigration ‘10 • Deep recession, austerity, but some growth!
UK and Ireland – Insurance overview • Intermediary / Brokers • Consolidation • Banking crisis • big problem for Ireland, no mortgage market, insurers tarnised • Basic products • Life and CI, some tiered CI, little Disability • Price driven, comparisons • Customers / Intermediaries don’t like complexity • RDR • Rationalisation • Brand and customer journey key
Individual New Business New contracts up 5% in 2009, 10% in 2010 and 2.7% in 2011 New business volumes down 2.2% in 2010 and down 2.4% in 2011 Source: ABI
The future is bright(er)! • Innovation in recession • Technology • Welfare state opportunities • Direct to customer • Price comparison • Modular • Up-selling with age, needs • Corporate Partnerships • links to their brand/values • simple product and process • all about customer satisfaction • Protection gap widening • Life - £2.4 trillion (£100,000 per person) • Disability - £190 billion* *Swiss Re Term and Health Watch 2012
Innovations • Underwriting • Process • Questions • Evidence • Claims • Process • Evidence
Underwriting process • Underwriting systems • Significant increase STP • >70% some instances, 30% clean • Standard, rated and declined • More rated • Driven by data • EUS identifies key areas • Rules experts look at those areas in more detail • One company >10% rise 12 months • Number of rules questions now being looked at
Underwriting process • Making decisions earlier • Focus on service and efficiency • Pre-sales enquiries • Rough idea of rating • Manages expectations (intermediary and client) • Completion rates • Distribution management / Non-disclosure • Data per intermediary • Number of clean, rated, smokers, under / over limits • Sentinel effect
Underwriting – Process - Telephony • Telephony • Lots of little t • Data fed back to improve STP • Now the norm • >80,000 new instructions • Well received intermediary and client • Average turnaround 3 days • Mostly digestive, respiratory, mental and respiratory • Also lifestyle, occupation and pursuits Source MDG */13
Underwriting - Process *Source MDG 2011 customer satisfaction survey
Underwriting - Process • Disability • Complexity seen as a barrier • ‘Own occ’ for all • Financial guarantees, no underwriting at claim • Quality and Consistency • Audit well established (internal and external) • Gen Re UCS 2012 • Interesting results despite basic products • Using results to: • Prove consistency, plug gaps, focused training
Underwriting - Questions • Simplicity • Still looking at fewer questions • More succinct • Easier for layperson to understand • On-line making things easier • Age specific • Predictive modelling • Driving convictions / motorcycles • Focus on lifestyle (smoking an alcohol)
Underwriting - Questions • Have you smoked or used any tobacco or nicotine products in the last 12 months? If yes, • How old were you when you started smoking? If no, • Have you ever smoked or used any tobacco or nicotine products? If yes, • How old were you when you started smoking? • How old were you when you stopped smoking? Depending on the answers, a nominal rating for ex smokers might apply • Using Non-Disclosure output………….
Observations • Statistics suggest missing valuable information • 3 questions • Why is it missing? • Why does it matter? • What can we do about it? • Why is this information missing? • Could be deliberate non-disclosure • or do customers not understand what we want? • TI data suggests the latter
Observations • Why does it matter? • Isn’t it picked up at claim? • Yes but only if it has to be • Key is getting client back to work • Dealing with ND at claim has potential to sour relationship • Could result in longer payments • What can we do about it? • Change the question
Typical application form Have you ever had, suffered with or sought medical advice for: Stroke, brain haemorrhage or brain injury? Heart disease or disorder (including heart attack, angina, cardiomyopathy or heart valve disorder)? Insomnia, stress, anxiety, tension, depression, personality/mood or eating disorder, mental illness or breakdown, psychiatric condition or suicide attempt?
What’s wrong? • Confusing mix of things within a single question • Mixture of: • symptoms e.g. anxiety, insomnia • diagnoses e.g. eating disorder • general categories e.g. psychiatric disorder • with treatment options e.g. counseling • Insomnia is so non-specific it is not useful. • People might omit things that they don’t think fall into specific categories. Thus something that is not thought of as a psychiatric disorder would not be reported.
Why change and not just interview? • Big T is one solution • Has been successful particularly with IP but….. • Cost implications • No STP at all • Not everyone is withholding information • Despite improved scripts long calls unavoidable • Adverse customer experience • Over disclosure all questions asked • Statistic show claims / ND is one or two areas • opportunity for little t? • It is quicker • It is cheaper • BUT……you need disclosure first and that’s the problem
So what should we ask? Have you experienced any mental or psychological distress in any form over the last X years? Not specific but it is sensitive. Would probably trigger need for additional information but a good TI script should clarify the nature of the problem. Over the last x years have you been bothered by periods of feeling down, depressed or hopeless? Over the last x years have you often been bothered by periods when you have experienced little interest or pleasure in doing things? Over the past x years have you experienced periods of anxiety or worry that have caused you distress?
Underwriting - Evidence • Increasing NMLs • on back of non-disclosure data • From distribution management • Paramedicals • Replacing GPRs as first line of evidence some ages • Fewer HIV • Historical data analysis - £1m – £1.5m • Financial evidence • independent verification • Internet evidence • SARS
Underwriting – Evidence - SARS • Request for full information on individual • Uses Data Protection Act legislation not Access to Medical Reports • Within 40 days, usually 10! (GPR 20+) • Small fee…..but will pay more (SARS £10-£50, GPR £100+) • More rated, more postpones, more declines • Easier to asses as no information missing • Not as time consuming as you might think • Guarantees claim (almost!) • STP the problem!
Claims Statistics In 2011: • £6.7 million (all products) • 97% of life insurance claims were paid • 92% of CI claims being paid (up from 80% in 2005) • Average pay-out: • Life £46,000 • CI £59,000 • IP £14,000 (average pay out 5 yrs) Still negative perception that we don’t pay claims. Source ABI 2011
Claims – process and evidence • Tele-claims • Paying them quicker • Customer or insurer? • Significant reduction (2 days not 21) • Waiving grant of probate • Alternative reference sources • Balance, need to understand grieving process • Tendency to phone customer too much
Claims – process and evidence • CI definitions • easier to understand / future proof, Troponins • Positive press • SARS could have considerable impact!
Conclusion • Both UK and Irish economies in recession! • Changes to welfare system could create insurance opportunities • Investment in underwriting systems means most business ‘straight through’ • Most innovative idea may be to get evidence on everyone! • Balance between paying claims quicker and an adverse customer experience • We’ve done process to death, now need to look at products!
