Dealing With LTC Insurance Exception Requests: Its A Team Effort

Weisiger had some suggestions for the home office, too. It "needs to be willing to take marginal risks. It should present the producer with options on counter offers. And it should view the producer as a necessary partner."

When a company grants an exception, this sets a precedent, pointed out Barbara Wilk, assistant director-LTC underwriting and claims at Northwestern Mutual, Milwaukee, Wis. "We need to learn from the decision, not forget about it."

Underwriters also need to guarantee consistency, when presented with the same set of facts on other cases, she said.

What types of new information could bring about a change in the underwriting decision? "Current and new information," Wilk suggested. Additional details from the client about the impairment would help, too. So would an additional set of blood pressure readings or other medical information, she said.

"Trust your intuition," Wilk added. "Look at severity (of impairment) and the clients current activity level. Ask, what are they doing? Are they just sitting around, or are they going regularly to the doctorare they activewill they overcome whatever it is they may have?"

If the outlying factors are very good, she said, "they may take your client from decline to accept."

But, Wilk added, the company should have an "escalation policy" that empowers the underwriter to look at other information and to send the case on for higher level review. The underwriters need a referral system, too, and they should be sure not to request extra information when they are sure the case will be declined anyway, she said.

The insurer needs to manage and analyze its exceptions and to quantify the impact they have on profitability of the business, noted Van Beach, an actuary with Milliman USA in Philadelphia.

This requires being able to capture the exception information, Beach said. "There is not enough to document from the underwriters notes. The information needs to be captured within the systematic structure."

Being able to pull this information together will enable the insurer to evaluate whether the underwriting decisions were good, bad or otherwise, he said. Then, the company can adjust future actions accordingly.

Doing this will cost money, Beach allowed, "but it will more than pay for itself in the long term."

Reproduced from National Underwriter Life & Health/Financial Services Edition, March 19, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.