Case Study – The Value of Pre-assessments


This case study focuses on the underwriting process, and the value of utilising pre-assessments. It is designed to help advisers improve their process, their engagement with clients and to reduce completion times.


At a glance

Source: Melissa Crawford, Owner and Insurance Strategist, 19Thirty
Client: White collar professional with history of drug use
Topics covered: underwriting, pre-assessments, engagement, positioning loadings and exclusions


In detail

What is a pre-assessment?

A pre-assessment is an indication from an insurance company as to the possible terms they may offer a client. A pre-assessment is conducted prior to the submission of an application, based on information disclosed by the client to their adviser, which prompts the adviser to believe there may be amended terms. If done correctly, a pre-assessment can pre-empt any sub-standard terms and ensure faster completion of the application. But more importantly, says Melissa Crawford, the pre-assessment can form the basis of your advice.

Client example

John came to see Melissa in October 2014. He was a full financial planning client, looking for assistance with a broad range of matters, and Melissa was his insurance specialist in the firm.

At first glance it appeared to be a relatively simple case. John was working as a white collar professional, with no significant medical history, no hazardous activities and a perfect family history.

However, Melissa uncovered quickly that John had a potential underwriting ‘red flag’ – a history of multi-drug use. The drug use was largely confined to John’s younger days, mostly experimental, with some slightly longer-term usage. However, John confirmed he had been drug free for the past three years.

John’s drug history was uncovered through the completion of a comprehensive pre-assessment form, which is used by Melissa’s firm with all new clients. The form captures potential ‘red flags’ that typically cause delays in underwriting such as: BMI, upcoming travel, specific medical conditions, any drug/medication usage, pending medical tests, etc.

After John completed the pre-assessment form, a request was sent to all insurers on Melissa’s firm’s Approved Product List, with a request for possible terms.

A cross-section of responses was received:

  • Half the insurers said they would decline the cover
  • One insurer offered life cover only, with 200% loading
  • Another offered life, TPD and trauma, all with 100% loading, but declined income protection cover
  • One offered life and trauma with a 50% loading, but declined TPD and income protection

What happened next?

The process uncovered two potentially favourable outcomes for the client, which could be worked into the overall advice strategy. The client was looking for advice on all cover types, and, based on his age, was interested in a cost-effective structure. Taking into account all the client’s circumstances and wishes, the offering for the life, trauma and TPD cover with 100% loading was the most attractive and aligned to the client’s best interests.

the client was aware of the potential implications of their medical history upfront

The pre-assessment information provided by the insurers helped Melissa to form the basis of the insurance recommendation to the client. She was able to determine which insurer would be the most appropriate for the client’s needs, based on the pre-assessment, without having to submit a full application.

It provided greater certainty on the potential outcome for the client, and allowed Melissa to position the loading at the time of the advice presentation. As Melissa works for a firm that provides assistance to their clients on cashflow and budgeting, it also meant that the affordability of the insurance with the loading could be considered and factored into the overall plan as well.

The pre-assessment process also improved the application completion time, because once the full application was completed and submitted, it was matched to the pre-assessment advice. Melissa and the client were aware of the medical requirements at the time of application submission and could streamline the process. The time that is usually spent submitting an application, finding out requirements, awaiting the final decision and positioning with the client was significantly reduced. That time was effectively moved to the advice research and preparation time, which led to a faster completion.

Finally, the client was aware of the potential implications of their medical history upfront, saving Melissa an uncomfortable conversation after the full application had been completed – a time when most clients would assume their insurance was as good as finalised. By using the pre-assessment service, in addition to Melissa’s research, the firm was able to position the best likely terms with the client.

“All the additional features, benefits, bells and whistles will not matter to the client if there is likely to be only one insurer that will consider their application,” says Melissa.

Why pre-assessments?

Typically, there are questions in fact finds and questionnaires which relate to medical history, but these tend to be subjective and up to the client’s interpretation of their own health, or what they believe constitutes a ‘significant medical condition’. A pre-assessment questionnaire not only leads to better client outcomes and greater certainty upfront, but is also a great way to familiarise the client with the types of questions that will be asked during the insurance application. It prompts them to remember details and gather relevant information early in the process, and also helps to position the Duty of Disclosure in a tangible way.

Looking at this example, if Melissa hadn’t of used a pre-assessment service with John, his drug usage wouldn’t have come up until the application process. If the insurer chosen by Melissa was ultimately one which would decline the application based on John’s drug use, all the time she spent researching the product recommendation would have wasted. Similarly, she would potentially have had to repeat the application process with another insurer, to see if she could get a better outcome for her client.