You are sitting in front of a client who is interested in taking out life insurance. In fact, they are happy to begin the application there and then.
"That's straightforward, you say, as you pull out a data capture form and begin to run through the questions.
"Have you had any medical conditions, illnesses, or injuries?"
"Nothing serious, I've been lucky," your client tells you. "I had a trapped nerve a couple of years ago, but it wasn't too bad."
"When were you first diagnosed with this condition?"
"I can't remember exactly."
"Please tell us the nature, severity and frequency of any symptoms you have had, or are having."
"Oh, as I said, it was a trapped nerve - quite minor really."
"When were your last symptoms?"
"I don't know. It didn't last long."
"Have you had any tests or investigations for this condition?"
"Is this relevant? It was only a trapped nerve."
Before you know it, the client has asked if you can telephone later to complete the questions.
This can be the experience of some advisers using the 'fixed' method of protection underwriting.
It involves a standard set of high level questions designed to be applicable to almost any medical condition. As a result, the questions are the same whether you're discussing a trapped nerve or a stroke, and this increases the risk of either capturing too little information, or too much.
Interactive underwriting, on the other hand, works differently. It provides questions tailored to the answers clients give, and skips those no longer relevant.
The smarter questioning allows the machine to make a decision in many more cases and helps to avoid the case being referred to an underwriter.
So if a client has only a trapped nerve to divulge, they'll only be asked relevant follow-up questions, such as 'are you fully recovered?
And instead of waiting to put your client on risk, you can provide your client with a point-of-sale (POS) decision in as little as 15 minutes.
The rise of interactive underwriting
Interactive underwriting, as well as straight-through processing and POS decisions, are not new developments in protection.
But the frequency with which interactive is used has grown rapidly.
Only 10% of business written with Zurich through financial advisers in 2018 used the fixed route, and this pattern has continued into this year.
Advisers with a higher proportion of high net worth clients find those clients often prefer the more traditional method of completing an application. An example of this is whole of life business.
Benefits of interactive
The benefits of interactive underwriting are three-fold: there is an upside for the adviser, for the client, and for the insurance company.
From an adviser's perspective, most insurers offer higher commission on policies written via interactive. This is for a simple reason: it involves less work for the underwriters so more policies can be placed on risk overall.
There is another, less feted reason why interactive can benefit advisers: it can be impressive to a client to be insured so quickly, and can help strengthen a relationship.
Similarly for the client, a point-of-sale decision means no delay, fewer underwriting questions, and they can enjoy the peace of mind protection offers almost immediately. And while acceptance rates are quicker, so too are declines, so a client isn't left to wait for a decision that may ultimately be 'no'.
Interactive underwriting is flexible too. There are a number of ways to collect data from a client and pursue the interactive route. Some advisers sit with clients to begin the online application, while others capture clients' answers to enter into the interactive system later. A call centre model is also likely to use interactive underwriting.
And some insurers, including Zurich, offer a 'delegated' underwriting option, allowing the client to complete the interactive questions at their own leisure.
Popularity of interactive underwriting
Of course, for some advisers, the fixed route remains the preferred option, usually for reasons to do with client preference or advice model. Some advisers have never used a laptop in front of a client and don't intend to begin now.
These are all legitimate reasons, and it is unlikely that 100% of applications will be made via interactive underwriting, at least for the next few years.
But its rise, and popularity, continues to grow with advisers.