Everything you need to know about large case underwriting

How did you get into underwriting?

I’ve been with Zurich for more than 20 years having joined the pensions team in 2001, initially as an administrator for smaller schemes. After achieving the financial planning certificate, I was looking for a new challenge when I saw a new opportunity in underwriting. I never knew how much I wanted to be an underwriter until I became one! The best way to describe my job to friends is that it’s one of the most interesting jobs you can have in the financial services industry. My days are so varied and incredibly fulfilling.

What’s the makeup of the large case underwriting team?

I moved to the large case team in 2015 and became large case underwriting manager in 2020. I have a team of ten people with a combined  experience of over 150 years. We work closely together, discussing cases on a day-by-day basis. We share experience and support each other to achieve the best outcomes and enable us to write more business to for our distributors. My role is to coach and help my team develop.

Relationship building is incredibly important when you’re looking after complex cases, and therefore we have built and maintained strong relationships with certain distributors and advisers. I’m proud to say that we have invaluable relationships with our reassurance offices, third-party providers, and with bespoke clinics that we use to gather medical evidence. By working in partnership with our adviser firms and educating them on their underwriting knowledge, enables us all to grow.

What are Zurich’s strengths in large case underwriting?

It is common in the protection market for providers to reassure a high proportion of their business to large reinsurance companies. Zurich is different. “Often, the insurance company itself doesn’t hold a large amount of the risk of claims; it is passed across to reinsurance companies,” says Nicky Bray, chief underwriter at Zurich.

“Where Zurich differs from a lot of our competitors is that we are very keen to retain a lot of the risk of claims ourselves.”

This means we can have a lot of influence over the decisions we make and the business we write. Consistently making robust decisions means that our reassurance partners have a high level of trust in us to continue to make those good decisions.

The team is solely focussed on large cases, meaning we can prioritise any large case application, we work with travelling or independent doctors to perform medicals and we also have a dedicated technical team to help with complex tax, trust and propositional questions.

What do you consider a large case?

Anything that is £1 million or more for life or critical illness and anything that is £50,000 a year or more for income protection comes to our large case team. We also look at anything that may not be over the threshold in terms of sum assured but is deemed high value in terms of the monthly premium. Anything with a monthly premium of £250 or more qualifies as a large case. Someone who is older and may not need as much as £1 million of cover may still pay a higher premium because of their age and/or health. We would want to give that case special attention and care.

Can you give me a flavour of the large cases you receive?

We receive a high number of Personal Protection cases which could consist of a high earner looking to cover a mortgage and school fees and protect their family, allowing them to maintain their lifestyle in the event of their unexpected death, critical illness or incapacity.

We are seeing growth in our Business Protection applications and working with advisers to help ensure business continuity and release capital for share purchase agreements. We accept high volumes of keyman and shareholder cover to make sure a business can continue if a director of someone else in a position of power can no longer fulfil their role, or to safeguard financially against the unexpected death or critical illness of a shareholder.

Within the current economic climate, we are seeing more cases designed to cover inheritance tax [IHT] – people with a significant amount of assets whose beneficiaries are likely to face a significant IHT bill and who want to make sure their heirs have enough cash to meet the liability at what could be a difficult time emotionally. You can use term joint life second death or joint life second death Whole of Life for this type of cover.

What do you consider when underwriting large cases?

All large cases are referred into our large case underwriting team, as the higher sum the assured are being sought, the more medical and financial evidence we will be required. However we won’t ask any financial questions unless the cover is under £2 million for life and £800,000 for critical illness.

Where we do need financial evidence, the financial questionnaire asks why a client is seeking this level of cover. If it’s for personal protection, we ask about any dependants and your client’s current salary and liabilities. We will take these factors into account and then may allow some flexibility in the amount of cover requested e.g.  to allow for future proofing for aspects such as increases in income or inflation to arrive at a suitable insurable interest. If the cover is to meet an inheritance tax (IHT) liability, we look at the overall value of the estate and the assets subject to IHT. We don’t like to see financial underwriting as a barrier. As long as what is being proposed to us is sensible and reasonable, we are open to potentially writing that business.

How can advisers help to facilitate the process?

I’m always keen for the adviser to try and obtain and provide the financial evidence as early as possible in the process. It’s far more robust and effective to be able to set the expectation from the outset. The last thing you want as an underwriter, adviser or client is to spent time medically underwriting, and then when we get to the end of the process the financial aspects don’t stack up.

Financial underwriting is a bit like Dragon’s Den – we need to assess the current and future value of a business, and in doing so we want to look at the gross and net profit over the past three years. If you’re asking for multiple million pounds worth of cover relating to businesses that are either not generating a significant profit or trading in the red, at that point we have to have a conversation about the rationale used in reaching the sum assured. Where is the demonstrable loss in the event that the client passes away or suffers a critical illness? Sometimes there will be things we don’t know about – new contracts, business plans or restructuring. The essence of any insurance is to provide security and stability at a time when your client really needs the support. It’s not there for wealth creation by giving a windfall in the event of bad news. As long as the cover requested is reasonable, we want to have constructive conversations with advisers to be able to find a good level of comfort. We want to have a sensible approach and look for solutions to help advisers place the business.

What can advisers expect when submitting a large case to Zurich?

We recognise that each large case will be unique to you and your client. We aim to do everything we can to make the underwriting process as straightforward and convenient as possible. Your client’s application will be in the best possible hands. I’m very lucky to work with a team of highly experienced underwriters who are passionate about writing business and delivering an outstanding service to our customers and intermediary partners.

We run an open phone line and email service to allow advisers to discuss scenarios pre-application for high value business to explore what we can do for them, and we’ll give them pointers and advice on how best to place the business. We want to make the underwriting journey as smooth as possible, so we prioritise all large case applications. Any initial application is always looked at by the end of the next working day if not sooner. Once we’ve assessed the application initially, we’ll set out the evidence we need. We pride ourselves on being open and available to help advisers through the process. How long this takes varies and is subject to the size of the cover being requested and how long it takes us to gather the relevant evidence. This depends on where they are based and where there is a clinic with availability to undertake the medical. A good outcome would be to achieve a result within two to three weeks. We have very generous capacity to write large sums assured and very generous free cover limits for the time period during which the client is being underwritten. We don’t want to rush it out the door. It’s about getting it right first time.

Why choose Zurich for your large cases? Find out more about our large case underwriting here.