Anonymous Interview with a Life Insurance Underwriter

Jeff Root: Hey life insurance agents, you’re listening to the Modern Life Insurance Selling podcast where we provide the tools to help you grow a more profitable life insurance business by selling online and over the phone from anywhere with an internet connection, even if you’re alone in your quest to build your life insurance business, just know that there’s a community of life insurance agents at SellTermLife.com connecting and helping each other grow their businesses from home offices, coffee shops, and beaches all across the nation.
Welcome to episode number 39 of the Modern Life Insurance Selling podcast. I’m your host Jeff Root, and today we’ll be speaking with an underwriter from a life insurance company who will remain nameless. I thought it’d be a cool episode to do a Q and A with an underwriter without giving away the company name or the underwriter’s identity so he can be as candid as possible with us in his answers. Hopefully, this episode will give you a better understanding of underwriting and of underwriters in general.
We’ll talk about stuff like how to become an underwriter, typical caseloads, how many cases they’re working on at a single time. What they’re evaluated on, and we’ll also ask questions our community came up with as well, but first, like always, if you like what you hear and are listening in iTunes or Stitcher, please leave us a review. Also, if you have any questions or would like a topic covered on the podcast, please use the send voice mail tab over at SellTermLife.com. All right. This is going to be a straight Q and A, so let’s get to it. All right, welcome to the podcast.
Underwriter: Thank you.
Jeff Root: I usually start with an introduction of sorts, but we’ll keep this interview anonymous, so let’s just start with what it takes to become an underwriter. Is there any schooling for what you do? What’s the typical path an underwriter takes?
Underwriter: It’s all over the place. We’ve had people who do the more conventional, finance, e-con majors, we get BATs, business majors of all stripes. You also get people who might have been former nurses who just got sick of the hours. I think someone I work with is also a pharmacist. They just got tired of that whole gig. It’s all over the place. We have people who used to work with field reps as assistance reps, stuff like that. It’s a wide and varied range. You don’t know from person-to-person what you’re getting.
Jeff Root: Okay. Is it typical a more analytical person who pursues underwriting or is there a typical type of person you see that becomes an underwriter?
Underwriter: Yeah, they’re big on the whole analytical, time management side. That’s what they’re like. I’ve always felt that they should pursue the kind of agent [versus 00:02:37] work in the field more because one of the big things you get at the end of every case is that you have to sell the rating to the field. That’s kind of a problem if you don’t have any experience with selling yourself.
Jeff Root: Is your position tied to how many cases get placed?
Underwriter: Not placement necessarily. We usually use it by how many cases are either approved, declined, so how many you’ve taken your last action on.
Jeff Root: Mm-hmm (affirmative).
Underwriter: That’s one of the bigger things, so it’s not necessarily placement. They can’t always track those because sometimes commissions are paid all year long it’s done suit your [tail 00:03:12].
Jeff Root: Yeah.
Underwriter: It might be placed for a year, and then all of the sudden they drop off, or it might be 6 months and they’re gone.
Jeff Root: Okay. How are underwriters evaluated in their jobs?
Underwriter: It depends on the company. You could be based on a number of cases you approve or decline every month. Certainly, there’s an element of accuracy. That’s a tough one, though, because if you do audits, you get a ten-case, twenty-case audit, however many you care to. That means you have to pull somebody else out of production, so that’s someone else not doing work and having to go over your cases. They like to keep track of agent satisfaction on this. It’s a big key for them. If they’re consistently getting calls about your ratings, your decisions and the time you’re taking on cases that’s a giant problem. If you’re taking two weeks to go over a set of records that’s not really that complicated, then, yeah.
Jeff Root: You’re caught. Okay.
Underwriter: It’s going to be an issue for you.
Jeff Root: Yeah. Okay. What is an underwriter’s usual case load?
Underwriter: That’s going to be carrier-dependent. I know for us they usually wanted to keep us around about 80 to 95, but with end-of-the-year and they’re trying some new things with my specific work place I’ve seen people around 150 and some approaching 200. Yeah, it’s all over the place. Some carriers don’t mind if you go a little bit higher if you have lower amounts because you’re not waiting for as many requirements. Some carriers if you have to wait for those higher dollar amounts and higher requirements they don’t want you going above 100.
Jeff Root: Okay. Are you supposed to blaze through as many cases as you can? Are you supposed to just push the process along as fast as you can?
Underwriter: Within reason. Some companies have it down to, “We think you should be able to review so many cases per hour for your initial look-at or initial walk through.” Some cases have even, I believe, actually [tied through 00:04:56] what they believe their average underwriter can get through an APS and other documentation task for. It just really depends on the carrier and what their expectations are.
Jeff Root: Got you. Okay, so I guess the question we have here that we took from the community. We asked our community a bunch of questions that they would ask an underwriter if they had the chance to. A few of the questions here, we’ll start with one, is, when underwriting times are slow all around for a company … We get some companies that sometimes take two to three months just on average. It’s not just because of one case that the APS took forever or whatever. Is it because of caseload that you guys are getting just bombarded with cases? Is it you got short staff? Is there anything else that it can be? Because it seems like every once in a while carriers take months for decisions on average.
Underwriter: Right. Those are two of the big ones. Caseloads can get in your way. Sometimes you have ten or fifteen cases just to follow up on and look at and prod the field and say, “Hey, I’m waiting for this information. Do you have it?,” or, “Do you have any further information about when you might have it?” You can also be waiting for the things on files. You can order discretionary requirements that might need time to take in. MIB code details might need time, public record checks, things like that. Financial requirements, those can take extra time off your day, too.
It can also take a whole bunch more time if you’re having to talk to reps about your decisions, so a twenty minute phone call sometimes, or just bouncing emails back and forth and just saying, “Well, this is the reason we rated you,” and, “Well, why is that? When did you find this?” It’s back and forth. You come out and you do one thing, and then you see a reply from this person. You don’t want to leave them hanging, so you reply again to them. It goes back and forth for what feels like for ever, and it’s only ten minutes, but it’s ten minutes that you’re not looking at this other case.
Jeff Root: Got you. Overall, I know there’s times where that happens. For example, I’m not going to call any companies this year, but there is one company this year that was taking on average ninety days from application submitted to an actual decision. That wasn’t just one-offs, this was everybody that was submitting cases to this company, and it’s a big company. It happened to another big company earlier in the year. We’re wondering why those happen. We understand the delays because of all the reasons you just mentioned, but as far as that goes, do you have any insights to that at all?
Underwriter: It could be carrier-specific. When you get APSs, you usually order through a couple of different copy services, so there could have been a breakdown in relationships there.
Jeff Root: Okay.
Underwriter: I know that a couple of different places that we get records from we expect them to take at least four to six weeks minimum without breaking a sweat. Kaiser Permanente is one that’s notorious for that.
Jeff Root: Yeah. I’m sure the VA as well.
Underwriter: [crosstalk 00:07:46] KP records and, yeah, VA records are all of the [peach 00:07:49]. If they’re not slow, then they’re totally disorganized, and you have to deal with it that way. It could be a host of things going on. I would expect something like it’s a caseload/requirements-gathering type of thing.
Jeff Root: Okay. All right. Next question here to shift gears a little bit. Why don’t life insurance companies give agents underwriting guides that you work from? Not the field underwriting guides we get, because they’re often broad and vague. They’ll say, “Diabetics table two to four.” I know there’s underwriting manuals you guys work from, whether it’s a Swiss Re manual or your own proprietary manual. How come agents don’t get access to that to submit more accurate ratings when they’re submitting business?
Underwriter: A lot of companies feel that’s their secret sauce and how they come to their decisions. They don’t feel like it’s a giant CIA secret that it’s going to get out about it. A lot of companies actually play from the same playbook. It’s really expensive to write standards, so a company will actually buy a standard from somebody else, and then they use their own experience to color the ratings.
Jeff Root: Ah, okay.
Underwriter: It’ll look a little bit different than, let’s say, Swiss Re, Munich or somebody else wrote, but it’ll just basically be cosmetic. It’ll be a face lift to the original rating manual. It’s prohibitively expensive to write them on your own, but when you do have them … I think the bigger concern for home offices, though, is that they don’t want every history they get on a certain thing, say, like depression, to look the exact same every time. [crosstalk 00:09:19] exactly, and cleanly into this bucket, and we can accept it every time. It’s just a major miracle that we have no ratable depression histories.
Jeff Root: Yeah, so like adverse selection. You’d get a bunch of people with depression coming to you guys. I get it. That makes sense.
Underwriter: We don’t want you to reverse-engineer a rating. Let’s say you did have someone with a depression history come in, and they don’t have any other reason for the rating aside from depression, and all the sudden it’s like, “Whoa, they are pretty highly rated.” You look down and it’s like, “Oh, to get that highly rated they must have had some suicidal ideation or a gesture or something like that,” it’s like, “Oh, well, we didn’t exactly want you to know that.”
Jeff Root: Got you.
Underwriter: Also, the other thing that can happen with that is sometimes people call things when you’re taking the medical that they aren’t. Take depression, sometimes your client might call it depression, but their doctor thinks that it’s actually bipolar. We might be calling it depression in our communication to you, but it’s actually bipolar on the records, and that’s the standard we use to rate from.
Jeff Root: Okay. Got you. All right. Another question here is, do cover letters really help? Can agents actually provide extra information that could sway a decision?
Underwriter: I believe so, and I know it’s gotten around the company I work for that someone said to one of our underwriters that, “Oh, you guys don’t read cover letters anyway.” I’d really like to find out who started this odious lie because I read them. Sometimes they might not be contributory. Sometimes it might be, “I want want to put everything on this billing information,” or, “I want to put everything on this certain payment method.” That really doesn’t tell me much, I’ll skip that. People who work in our billing department sort that out. I believe they generally help. They can sort out a difficult financial situation.
If you have some additional information to give I usually don’t mind it. You do have to be careful with it. I did have one case where a rep said that this couple had smoked marijuana, and about three months down the road they were coming in and he rated them full-blown tobacco. He didn’t have to because come to find out all they were doing was just ingesting it. I don’t have to give you full-blown tobacco. We have a class in between, but I can’t give you non-tobacco. He put a little bit of a different situation on it than it could have been.
Jeff Root: Okay. There are some situations. We write cover letters for almost all of our high-risk cases where there’s information that isn’t asked on the application, or isn’t taken on the medical exam just to make sure you have that information. For example, a common one is if we’re dealing with an over-weight person, but they’re a body builder, they’re very muscular, we’ll try and include a picture of them. You can see that they’re not over-weight because of the way they eat, it’s just because they’re muscular. In situations like that, is that something where it would help in looking at the build? All you would see is numbers, right, height and weight without seeming that?
Underwriter: Right. Yeah. The BMI number, yeah. Unfortunately for us, it’s the theory of BMIs, I like to call it. They way we have to explain it to people is that, irrespective of how muscular you are, the vascular [inaudible 00:12:24] in your body, so the [inaudible 00:12:25] has to work harder to get the blood out to you. That’s the way we try to explain it to people. I would imagine with some carriers that you can maybe buy back some credits, maybe try to negotiate a better class or negotiate a better reconsideration. If you included a picture and said, “Hey, this guy is not just sitting on a couch all day eating bon-bons. He’s working out and …” You don’t have to tell me that he benches 320 and squats five and a quarter.
Jeff Root: Yeah. Okay. All right. Does it make you relate or connect to a case better? I know you said you could have anywhere from 80 to 95, 100 cases, whatever your caseload is. To know that if you describe why they’re buying the coverage, even if there’s an image, or any sort of information on top of what you see every day. I’m sure you see lots of medical records and exams come though and reviewing lots of applications to make decision. Does it help in humanizing an application?
Underwriter: Yes, I believe it helps.
Jeff Root: Okay.
Underwriter: It could be explaining a financial situation, juvenile cases typically have them. Grand dad wants to cover wants to cover all eight of his grand kids. It’s a nice little thing and helps you link-up everyone else’s cases and make sure that the financials don’t get underwritten differently, which can be a real pain because sometimes you get these older clients who have a lot of money, and sometimes the kids maybe not have the adequate coverage to go along with value standards.
Then all the sudden you’ve got some people going in one direction on the case and you’re trying to keep everyone unified and not confuse the rep as to why you have these eight juvenile cases, but two people want to decline because of not having enough coverage on the parents, and two are all right and … Yeah, at least it keeps everybody together sometimes, too. Business cases can be like that, too. You have a whole bunch of people coming in for KP, or there’s a business purchase coming in for a couple of different entities. That can help out, definitely.
Jeff Root: Okay. Great.
Underwriter: Sometimes the entities don’t totally get together. Say, they have a couple of different restaurants, but they’re all incorporated under different LLCs. It might be the same person running the said LLCs, but if we don’t know that we just view it as two different businesses. Yeah.
Jeff Root: Okay. Got it. Makes a lot of sense. Thanks for clarifying that. Another thing is quick quotes, do you pay attention to quick quotes when they’re attached?
Underwriter: Yes. They way I view is as with agents, if you say there’s coverage, there’s coverage, so you’re bound by your word and your verbal communication. I guess because I used to work in the P & C side and the sales side too in some capacity, not for that long, but enough, and I taught pre-licensing. Basically, if I put it out there I view it as, I don’t want to say like a live grenade, but essentially it is because someone can pick it up and run with it. Yeah, I take them seriously. It’s your word, and you can be put on it, so, yeah, you have to be very careful with them. We also have other systems, too. There are phone call questions that come in that you can be held to. Informal applications are also another one. Yeah, we take them seriously.
Jeff Root: Okay. Do you really consider them a tentative offer, then?
Underwriter: Yes.
Jeff Root: Okay. Great.
Underwriter: Like I say, I hate to make it sound like a bad analogy, but it’s almost like a like grenade. You have to watch out, and make sure that you don’t get too casual with how you underwrite it. If you know it’s bad, at least start it off in a neighborhood that you feel comfortable with saying, “Hey, I don’t think it’s getting better than here, but I don’t think we’re getting worse than here.”
Jeff Root: Right. Okay. Do most underwriters handle the quick quote desk, or is it typically a couple of underwriters that man that, they’re hired for that? Do you guys have to, I guess, go on a rotation on who’s going to handle all these quick quotes that come in daily?
Underwriter: Usually they just get mixed in and shot back out. They’re considered parallel to your regular work day.
Jeff Root: Okay.
Underwriter: Yeah, they’re the quick and dirty version.
Jeff Root: Yeah. No, it’s good, that’s good. Let’s move to a few risks here. I know some agents had some questions. How come most life insurance companies will only cover 70 to 80% of an SBA loan?
Underwriter: An SBA loan to most companies tells you that it’s a newly-established business. Say it’s a person who’s been running restaurants for twenty years, and he’s just going off on his own or starting a new venture. If he’s doing SBA it tells me that this isn’t totally him. It’s someone who’s just starting a new business. We would want to limit our risk on newly-established businesses that way. I know some companies don’t care. They’ll just look at it just in income perspective up to a certain amount, up to sometimes maybe even just a million or even two million. That would be their limit for just saying, “Yeah, this is just income consideration, and we’ll take it.” The other thing is, too, is maybe you can blend that in, just say that, “Yeah, we’re coming in for business purchase and key person on this,” and just fudge the rest of the whole and call it even.
Jeff Root: Yeah. Okay. That makes sense.
Underwriter: Yeah, SBA tells me that it’s a newer business. That might be why some companies are a little bit hesitant because they might not stay enforce as long.
Jeff Root: Okay, got it. All right. Are there any risks that you’re seeing that underwriting is getting more aggressive on, industry-wide, your company or industry-wide right now?
Underwriter: Sure. For the good, I think some depression and anxiety things are starting to come down. They’re starting to see some of those risks aren’t as necessarily as bad as in the past. I think that might be getting a little bit better for some carriers. Going the opposite way, I think you’re going to start seeing more family history, especially with cancer, going in, developing. The big ones are going to be-
Jeff Root: Developing in a good way or a bad way?
Underwriter: In a bad way. They’re going to start paying more attention to people’s family histories of cancer, in particular only the real hereditary ones, because all the studies are coming out saying colon, ovarian and breast cancers those are going to be the rough ones. If you have someone who’s medical records say literally every female member of her family has had breast cancer, that’s going to be a bad day.
It’s also going to depend upon when they were diagnosed, if they died early-on from it. That’s one that you might have to start watching out for when you start asking for family history sections. You’re going to have to pay attention not only to the cardiovascular ones, but there’s going to be stuff, Huntington’s and Marfan and all the other fun disorders and now certain cancers. Yeah, that’s one I think that’s going to be coming into the forefront. All the studies are saying that hereditary risk is much more now.
Jeff Root: Okay. We’re also hearing around, I can’t really say where I’ve heard this, but we’re seeing fully-underwritten approvals come for HIV-positive people. Have you seen that at all?
Underwriter: Yes. I know in our company they’ve said that in the next fifteen years they think it might go industry-wide. It’s something that’s going to be highly-rated, and you’re probably not going to love it, but it could happen. Yeah.
Jeff Root: It’s insurable, and that’s a huge step.
Underwriter: Yeah, because now it’s not five years and you’re done for. It’s people that live twenty, fifteen, thirty years even. It’s down to the medication management, and you can set a mortality curve to that, at least. It’s just a question of being able to keep up on your meds.
Jeff Root: Got you.
Underwriter: Again, you might not love the offer, it might be small. It might not take more than a few hundred thousand and maybe, probably, a limit of 250 for that retention limit, but at least it’s something for them.
Jeff Root: All right. That’s a lot of good information. One last question here, there’s a lot of improvements with medicine and people living longer. There’s different studies coming out for all these different health issues where life span in increasing, people are getting better. Do you think the life insurance industry reacts pretty quickly to these? Do you think they’re slow-moving, or what’s your take on that?
Underwriter: They have to wait for mortality to roll in and wait for the numbers to roll in. Their medical study can show it, and then they have to revise and go through studies. They might see the study and then it might be another year before they can officially make the standard change happen. In some cases the medicine isn’t necessarily making people live better. Like, diabetes medications for type-2, it’s basically keeping you on an even keel. It doesn’t improve anything, but at least if you stick to it and you stick to a diet you’re not losing a foot. Yeah, it’s a good thing that’s going on. I certainly don’t mind it, but it’s not something that we can just be like, “Hey, the average life expectancy in the U.S. has exceeded another three years beyond what it has,” or what have you. “We can lower rates by this much,” or, “We can lower rating on this disorder by so much.”
Jeff Root: Right.
Underwriter: It’d be nice if we could, but it’d be definitely way easier to place some of these issues. Yeah. I think with some of the issues that we see, especially like the type-2 diabetics, you get a lot of that in the middle-age population. I think that’s going to be something that messes with mortality curves for a little bit here. It’s going to be something that we’re going to have to consider with benefits, especially waiver of premium and some other things and for ratings. It might get a little bit better for some people, but I don’t know if it can necessarily get to a place where reps feel it’s better.
Jeff Root: Got you.
Underwriter: The carrier might feel good about it, but the field might not.
Jeff Root: Yeah, makes sense. All right. Awesome. Thanks so much for all your insights here. I really appreciate you coming on here and accepting our invitation to be on this podcast. I know that you clarified a lot of stuff that our community and a lot of our listeners will truly appreciate. Thank you so much, again.
Underwriter: Glad to be of help. Thank you.
Jeff Root: Now for a peek into our community of life insurance agents over at SellTermLife.com. Here are some of this week’s hot topics. This week in the community, and to stay on the topic of underwriting, I shared my process of working with impaired risks. It’s my seven-point process I use every single time that helps me find the best rates available and also place these cases. Other agents also chime in with their editions as well. It’s just a great resource that I spent hours on for anyone that wants to be better at placing higher risks.
We also talk about how to handle those prospects who want you to email quotes. It’s tough to send accurate rates without speaking with someone on the phone. I personally won’t send rates via email without a conversation or them emailing me my qualification form which I share in this thread. Every agent is different. We all chime in with our best practices of handling this situation where your prospect just wants you to email quotes and doesn’t want to get on the phone with you.
We also share our predictions for 2015. There’s a lot of great technology coming out. There’s some life insurance software getting millions of dollars in VC funding, and new non-med products coming out. It’s going to be a very exciting year to be an internet life insurance agent.
To join the conversation and discover how you can use modern techniques to sell more life insurance, work more efficiently and on your own terms, head over to SellTermLife.com. We’ll see you back next Thursday morning for another value-packed episode of the Modern Life Insurance Selling podcast.