Reviewing Sub-standard Decisions

A recent post on the Life Underwriting Australia LinkedIn Discussion Forum caught the attention of many advisers, who were interested in how underwriters treat ‘sub-standard lives’. In this article, AIA Australia Chief Underwriter, Andrew McPherson, discusses the evolution of underwriting, and how advisers and underwriters can work together to assist clients with exclusions and/or loadings…

Improving relationships between underwriters, advisers and clients

Most of us would agree that the life underwriting assessment process has evolved in the last few years. From the extensive use of tele-underwriting, the considerable reduction of PMARs (Personal Medical Attendant Reports) and increased mandatory medical and financial limits, the underwriting landscape in Australia has seen a number of changes that have made it quicker and easier for people to have their insurance needs met.

One of the most important developments, however, has been the noticeable shift towards insurers providing client-focused life underwriters. The days of underwriters not being accessible to advisers (and clients) are long gone, and a major benefit of this has been the positive development in the relationship and communications between underwriters, insurance advisers and clients. This is particularly true when a client is provided with an underwriting outcome other than the anticipated ‘standard rates’.

So how can life underwriters add value to an adviser ‘selling’ a sub-standard underwriting outcome?

Apart from providing as much detail as possible for the basis of the final underwriting decision, a timeline for a review on a sub-standard decision should be offered wherever possible. Offering a review timeline demonstrates that the underwriter has gone beyond determining the current risk profile of a client, but has also considered the best future outcome for them.

The days of underwriters not being accessible to advisers are long gone

Client-focused life underwriters also look to provide alternative options wherever possible, so that a client may have a choice of outcomes and can select the one that best suits their needs. These outcomes can range from having a choice between a premium loading or policy exclusion, or even possibly extend to an alteration to the policy benefits.

How should this look in practice? Put simply, the underwriter provides a review date as part of their decision, indicating a time when more favorable terms may be considered, as well as what the client may need to do during this time period to achieve the most favorable outcome. For example, consider a prospective client with a musculoskeletal injury seeking income protection cover – a possible outcome could be a knee exclusion due to recent knee surgery. The underwriter can indicate a review date to reconsider the need for the knee to remain fully excluded from the policy.

While the final underwriting outcome may not be what a client was hoping for, the adviser can now position this in a positive light. From the client’s perspective, by locking in the decision today, they have the possibility of better terms in the future.

It is important to note that when an underwriter includes a review date as part of the decision, it is with the best intention of improving the terms for the client at a later date. Naturally, it must not be interpreted as a guarantee of better terms.

When should underwriters allow reviews to their decisions? Simply put: whenever possible. In practice, this is generally for situations where the client is likely to secure better terms by the review date.

Life underwriting assessment processes have developed considerably over the last few years, and the role of the life underwriter continues to evolve with them. Offering reviews on appropriate cases is an easy way to engage advisers in the underwriting decision process, as well as encouraging clients to focus on improving their health if this can potentially lead to a better underwriting outcome.


Andrew McPherson is the Chief Underwriter with AIA Australia. He joined AIA Australia in 2011 to lead the Underwriting Business Development Team, focused on developing and driving AIA Australia’s underwriting offer to the wider retail market. Andrew subsequently gained the additional responsibility for the entire retail underwriting team in his role as National Underwriting Manager and is currently AIA Australia’s Chief Underwriter, responsible for the ongoing development of the AIA underwriting philosophy across both group and retail markets.

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