Transcript Life Underwriting Jack of All Trades, Master of Hats

Jill Eberle
MSFS, CLU, ChFC, CPCU, FALU
Operations Manager
State Farm Life Ins. Co.
Overview
 Competition in the Life Insurance Industry
 Where does Underwriting fit in?
 Role of the Underwriter
 Risk Classification
 Underwriting Tools
 Types of Risk
 The Underwriting Decision
 In the News
The Competition
 Mutual versus Stock
 Multiline versus Life only
 Financial Services organizations
How do companies compete?
Where does Underwriting fit in?
Pricing
 Mortality
 Persistency
 Expenses
 Investments
Role of the Underwriter
 Risk selection
 Product knowledge
 Producer support
 Customer advocacy
 Support of organizational goals
The Underwriter - Jack of All Trades, Master of Hats
Life Underwriting
The Key: Understand the complete picture and know
what’s important
It’s about BALANCE – obtaining the right type and
amount of information to appropriately classify the
risk
Underwriting Tools
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Application
Examinations
Interviews/Questionnaires
Blood/Urine/Oral Fluid
EKGs
Prescription Drug History
Attending Physician Statements
Motor Vehicle Records
Inspection Reports
MIB
Types of Risk
 Medical Risk
 Financial Risk
 Motor Vehicle Risk
 Foreign Travel/Residence Risk
 The Occupational Exposure
 Avocation
 Aviation
 Personal Risk
Other Considerations
 Insurable Interest and Ownership
 Beneficiaries
 Antiselection
Risk Classification
 Often times use a standard manual
 Average or “standard” mortality risk represented by a
value of 100%
 Factors that impair or improve mortality are assigned
debits and credits accordingly
 Overall risk is given a score that translates into a final
rating
 Judgment of Underwriter is needed to adjust for variable
factors given the specifics of any individual case
The Underwriting Decision
 Discounts from Standard (ex: Preferred, Super Preferred)
 Table Ratings
 Flat Extras
 Exclusions
First Year Death Claims
 Natural Causes 63%
 Accidental Death 37%
 Average age of death, 41 years of age
 Motor Vehicle Deaths
 Heart Disease
 Homicide
 Cancer
What can we learn?
In the News
 Predictive Modeling
 Stranger-Owned Life Insurance
 Simplified Issue Products
 Genetics and Underwriting
 Epidemics
 Privacy
 Underwriting Manuals
Q and A