life underwriting reality an independents assessment hank george, falu, clu, flmi educator,...

Life Underwriting RealityLife Underwriting RealityAn Independent’s AssessmentAn Independent’s Assessment

Hank George, FALU, CLU, FLMIHank George, FALU, CLU, FLMIEducator, Consultant & CurmudgeonEducator, Consultant & Curmudgeon

Presented at ACLI Reinsurance Executive ForumPresented at ACLI Reinsurance Executive Forum

January 10, 2012 in Naples, FloridaJanuary 10, 2012 in Naples, Florida

Hank who? • Lay medical officer/medical manual writer at Northwestern Mutual, 1973-1985• Senior Vice President/Client Support at HORL/LabOne, 1987-2002• President of Hank George, Inc., 2002-present• 175 medical underwriting courses; mean 25 pages and 100 literature references• 400 books and articles; only books ever for producers about underwriting• Creator of world’s only super-simplified medical manual • Hank’s Rx Guide on-line pharmaceutical underwriting resource • 50 seminars for Society of Actuaries• 150 insurance and medical organizations addressed on 5 continents• 2-time MDRT main platform speaker• Founder and first chair, LOMA International Underwriting Congress• Author of free 30-page monthly Hot Notes with 1700 subscribers in 55 countries• Free information clearing house site InsureIntel with 1500 registered members• 2 life underwriting study groups; 60+ members• Columnist in NAILBA Perspectives, Best’s Review, ALUCA Risk-e-Business, On the Risk • Annual “Developments in Underwriting” lead article in LOMA Resource

This

Roadmap

is available

free

on-line

Every reinsurance underwriter Every reinsurance underwriter

should spend 3 months should spend 3 months working for a brokerage working for a brokerage

market insurer.market insurer.Then, another 3 months Then, another 3 months working for a brokerage working for a brokerage

general agency.general agency.

Life Insurers Life Insurers and and

“Engines”“Engines”

Revelations from the 2011 Underwriting Engine SurveyRevelations from the 2011 Underwriting Engine Survey

Engine Use StatusEngine Use Status

“Where did/will you get your engine?”

“Why do you covet an engine?”

As ranked by respondents

% “fully-underwritten” accepted by engine without intervention by Homo sapiens

Miles to go…Miles to go…

Purchase-to-Operational IntervalPurchase-to-Operational Interval

Designated as #1 Engine DrawbackDesignated as #1 Engine Drawback

““Time Time toto and cost and cost ofof implementation implementation””

“Do you offer or plan to offer within the next 3 years a super-simplified life product for the middle market?”

YES!

60.4% of Study Group Member Respondents

What would YOU say to reinsurer CEOs?

“Reinsurers need to be on the cutting edge in partnership with their clients re: reaching the middle market with super-simplified. I think they will see even more small and middle-sized companies looking to increase retention without such support.”

Chief Underwriter

* Being Piloted** In Development

Lab/Paramed Risk Scoring

Lab/Paramed Scoring in a Nutshell

10% 10%

80%

The The 5 Horsemen5 Horsemen

of the of the Lab/Paramed Lab/Paramed

Scoring ApocalypseScoring Apocalypse

• “If preferred mortality is already profitable, why shell out $$$$ for this?”

• “Are the vast majority of the other 80% merely redundant?”

• “How can I sell standard/rated to a producer whose client meets our preferred criteria?”

• “How can I avoid hell to pay on reinsurer audits if I gave preferred (or better) rates to applicants who do not satisfy our treaty preferred criteria?”

and…and…

““All ‘normal’ tests are ‘normal,’All ‘normal’ tests are ‘normal,’ but some ‘normal’ tests but some ‘normal’ tests

are ‘less normal’ are ‘less normal’ than other ‘normal’ tests.”than other ‘normal’ tests.”

(with apologies to George Orwell)(with apologies to George Orwell)

Social Media Site Foragingwill be Rampant

Will antiselection be rampant as well?Will antiselection be rampant as well?

““It would be a It would be a

HUGE BLUNDERHUGE BLUNDER for insurers to use for insurers to use

personal purchase records personal purchase records in life underwriting!”in life underwriting!”

- Hank George

R.I.P.Treadmills

ECGs

M.D. Exams

R.I.P.Treadmills

ECGs

M.D. Exams

Preliminary responses to 2011-12 Requirement Survey and a

25-company Study Group Survey

Already Using Will Soon

Rx RecordsRx Records 78% 22%

NT-proBNPNT-proBNP 40% 44%

Take-Home Message