One of the benefits of being a relatively small organisation is that we don’t need to apply sets of arbitrary rules to govern our approach to underwriting. Instead, we align to a set of values that are about finding simple solutions to complex cases, getting the most number of people insured as possible, and in so doing achieve the right outcome for the client but also for our pool of people already insured with us.
This is actually the cornerstone of risk transfer – people pay us a premium to pool their risk with lots of others, and we manage that premium pool for the benefit of those whom life delivers an illness, injury or even death.
To carry out this work properly one must ‘act with integrity’, a concept so important to us – it’s how we named our company. We are guardians of the risk pool, and our policyholders depend on us to only allow properly selected risks (new policyholders) into that pool.
We sat down with our Chief Underwriter, Scott Hodgson to learn more about how the team operate and our broad, balanced approach to underwriting.
First question Scott, why no rule book?
Scott: Arbitrary rules (or rules of thumb) are great as a starting point, for simple standard cases, or as a tool to govern a large underwriting team, but if the whole company is set up to operate like that, when you get something that does not fit into the mould it often means an inconsistent outcome, and advisers want certainty – good underwriters try their utmost to deliver this. Our philosophy is about giving Advisers the support they need to be efficient in their business and to facilitate the advice they provide by writing appropriate policies to cover client’s risks.
What is your view on cases that might be ‘too complex’ for other insurers, but you are open to consider? We know this is a bit of a specialty for the team we have assembled at Integrity who are all very senior with a lot of years and experience behind them.
Scott: Sometimes ‘complexity’ is relative to the companies’ risk tolerance and expense margins. Complex = time and therefore cost. What we’re seeing through the current pandemic, is that many underwriters are refusing risks over a certain tolerance and applying rules to selected industries based on anecdotal evidence. It makes for efficient operations, but I am not sure it always results in the best outcomes for clients or Advisers… or even for the life company.
We find medical risk is often about asking the ‘next’ question to get the best information – as the more detail on medical history we get the better. Our underwriting decision making on medical risks is aided by good data from our reinsurer (often international, but some Australian experience is being included where it is statistically viable).
For financial risks it’s important to have an understanding of how business (especially small to medium enterprise) works, and what challenges they face. Even though all our senior underwriters have many years of experience in insurance, we have all worked in industries other than life insurance – some of us in small businesses as well as academia and even global companies. We understand life insurance as a financial tool – it allows businesspeople to take on risks sensibly. It’s the glue of commerce.