Latest Poll – Underwriting at Commencement

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Should all life insurance products be underwritten at the time of application?
  • Yes (92%)
  • No (6%)
  • Not sure (1%)

Our latest poll considers issues relating to underwriting life insurance products.  It is based on one of the points raised by the AFA within its submission to the recently-closed Parliamentary Joint Committee Inquiry into the life insurance industry (see: AFA Calls for Broad Reforms…).

One of the concerns expressed by the Association in its submission centred around the different treatment of underwriting across the direct, group and retail advised life insurance sectors. It stated life companies should be required to underwrite all insurance products at the time of application, thereby ‘…banning the practice often seen in direct and group insurance of underwriting at the time of claim.’

The AFA noted, except in cases of automatic acceptance, that ‘…direct and group policies are often not subject to underwriting until a claim is made, which means that policy holders pay premiums for years without actually being covered under the terms of the policy.

…underwriting at commencement ‘…is critical to ensuring the integrity of the system

The submission argued that underwriting at commencement ‘…is critical to ensuring the integrity of the system that consumers rely upon in their time of need and has downstream implications for government social support and health systems, and importantly, trust of the industry.’ It continued, ‘The desire of insurers to “maintain the flexibility” of continuing to provide cover without underwriting is unacceptable given the consequences to consumers who may not be aware that they are not actually covered until they claim.

Do you support the AFA’s call that all life insurance policies should be underwritten at the time of application? Or do you agree that it’s ok, in order for insurers to offer consumers greater ease and flexibility within the insurance application experience, that they continue to have the option of underwriting at claim time?

Cast your vote; make your voice heard and we’ll report back to you next week…



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4 COMMENTS

  1. It is more than obvious that if an insurer is facing payment of a large claim, but still has the task (benefit) of underwriting the original application to complete, they will go out of their way to find something in the clients medical history to which they will say ‘this would have resulted in us declining the cover so, sorry, here’s your premiums back.’ The ‘thing’ they find does not have to relate to what the claim is for. And there are no set guidelines for what an underwriter will or will not accept, so you can’t argue that a ‘precedent’ is set because XYZ granted cover to someone with the same condition. All good if the person is a cleanskin but I’ve been around long enough now to know there aren’t too many of them around. Let the insurers take their ‘risk’ at time of application, not with the benefit of hindsight, after a claim has come their way. I’m staggered to see that even 10% think that this is OK.

  2. The issue without proper underwriting at the application side of things is or should be greatly apparent to everyone in the industry. Where this underwriting at claim time falls down is the clients have no idea how it works. They pay a premium assume they are covered { for everything?} because no one has asked them about that bout of bowel cancer or mild stroke they had 6 years ago.
    It is the “ostrich with its head in the sand approach” If they don’t ask and I have a claim I will just tell them you never asked me that ? That will work ?? Wont it ??? Surely they have no argument I will get paid !!
    WELL!! Shock and dismay when its declined and FOS has one more rejected claim to deal with how long before they need more funding to deal with this massive increase in declined claims because ” no one asked that ”
    Is it not best to know where you stand on this just in case
    A policy should never be issued without underwriting and the clients best interests put forward along with their medical history if required to GET IT RIGHT THE FIRST TIME!
    Get rid of policy “floggers” like the direct insurers or make them do the due diligence required by the licensed advisers who spend hours on getting things correct.
    Then and only then will the declined claims issue recede.

  3. Very sad too see the removal of some very good post earlier. Free speech please and not censorship restricted great veiws

  4. Lots of misinformation in this article and poll, there is no difference in the direct and retail claims processes, no company guarantees claims…

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