Non Issued (Not Taken) life insurance

[subatei]

I'm wondering what people are seeing for not taken (policies partially or fully underwritten but not issued) rates for term insurance. I have heard that the industry average is around 10-13%. Anybody have any input on this? I'm also curious about policies issued cash on delivery. Has anybody experienced or seen not taken rates for COD?

[Jack]

I'm not that familar with term delivery or not taken rates but COD? By cash are we referring to a check.

I'd also be cautious about sharing own company experience.

[Gandalf]

Yes, there are potential antitrust concerns.

[JMO]

I do remember hearing that substandard policies have a higher not-taken rate. I would think that a similar situation could occur if a client was present preferred/non-smoker/non-toabacco rates and for some reason did not get the premium level that was expected.

PS - talk to your most senior underwriter for a better assessment of your own company's historical experience.

[urysohn]

Not-taken rates vary by a significant number of factors. 13-14% seems very high to me as an industry average but I suppose it's possible. You'll see higher not-taken rates for:
- substandard issues
- issues at a higher premium cost (worse rating) than applied for (could be standard instead of preferred)
- premium due on delivery instead of paid with application (COD, as you say)
- a lengthy underwriting period prior to issue
- very large policies, as they might be shopped around to multiple carriers or individual might have reconsidered whether coverage was affordable

[Dumbdumb]

I'm wondering what people are seeing for not taken (policies partially or fully underwritten but not issued) rates for term insurance. I have heard that the industry average is around 10-13%. Anybody have any input on this? I'm also curious about policies issued cash on delivery. Has anybody experienced or seen not taken rates for COD?

While I'm not qualified to speak directly on industry averages, I can tell you that these numbers can vary widely based on a number of controllable factors. As urysohn mentioned, long underwriting times - that's controllable and has an impact. Agent/broker has impact, depending on how they've prepped the client and how they deliver the policy. Even something like whether the company sends the policy to the agent or directly to the client can impact not taken #'s.

I believe this is an area where there's some money to be made for someone who takes the time to crunch some numbers and implement some changes. I've shown a few advisors how to take their no-placed numbers to almost 0 including for rated cases.

An example from the advisor side on rated cases - consumers take ratings very personally. If there's a process that explains how the rating isn't a personal critique of their health on one hand, but also emphasizes that they should expect to have difficulty getting insurance in the future, then that can increase the number of policies taken.

And certainly underwriting time is huge - a couple week issue vs 6 months is going to make a difference. Company A allows advisor to enter data right into new business system via the web and follow it up with paperwork means underwriting starts work on the policy same day app is taken. Company B is paper based, advisor takes app tonite, sends it by courier to wholesaler the next day (2 days). Wholesaler opens mail, processes, and best case, sends it to insurer, add another 1-2 days. The motivated individuals in the mail dept. open it up, and send it to the processing dept. Another day. Processing manually enters it into the system and underwriting starts looking at it - now it's a week later.

Same thing on the return path. Company mails policy to wholesaler who processes it, sends to broker, contacts client to book appt. That's a wasted week on the backend. COmpany mails policy to client directly, eliminate one week on the backend. That's two weeks chopped off of policy delivery time. And emperically I believe this alone will have an impact on not taken.

Add in another week roughly from the time the underwriter makes a decision to the time the issue dept. prints and processes a policy....it's beyond me why it takes a week to print the paperwork for many companies.