Insurance Underwriting
What you need to know about accelerated underwriting and drop ticket applications!
Technology and carrier advances in underwriting over the past few years have led to life insurance carriers being able to process a life insurance application electronically and for some people with no medical exam and medical records. This is a great solution, but not for everyone. For some people, these programs do not work exactly as communicated by the carrier. It is important to know how these work and what type of clients they work best for.
A drop ticket and accelerated underwriting are two different programs that can work together or be separate. A drop ticket is where the agent completes a basic online application and the carrier contracts with a third party to do a phone interview to complete the application. The agent is responsible for the basic application. The third party contracted by the carrier prepares the application and orders the exam if needed. The application is sent to the carrier, and the carrier orders the medical records and all the underwriting requirements. The agent’s next step is delivering the policy. Accelerated underwriting is where the carrier can approve an application without an exam or medical records. The carrier obtains the client’s medical and financial information electronically, and that information is scored by utilizing a set of parameters created by the insurance company. A client that meets those parameters is approved, and the client that does not, their application continues down the traditional underwriting path.
An application can be started as a drop ticket to do accelerated underwriting or traditional, and a paper application can be taken to do accelerated underwriting. It is important to remember they are both separate processes that can work together but do not have to. Both programs work best for younger healthy people. People over 55 with a health history not as well. Not having to complete a lengthy application or order an exam is convenient for the agent, but the price of the convenience is no control of the case. The carrier owns all the underwriting, and if the client does not get the desired offer, the carrier will not communicate to the agent why. A letter is sent to the client. The records and exam belong to the carrier, and to shop or move the case, the client must start all over again. Also, some drop-ticket programs will not order medical records to save money. That can cost the client a better rate class. They will offer a standard non-smoker when a preferred non-smoker might be available if an additional medical record is ordered.
The accelerated underwriting programs are limited by face amount maximums. They range from $1,000,000 to & $3,000,000 depending on the carrier. The carrier will request an Rx report to see what prescriptions if any, the client has been prescribed, Medical Information Bureau to see if the client has been declined or rated for a prior insurance application, Driving record, Credit Report, and other financial data reports. The carrier will utilize all that information to determine if the client can be approved without an exam or further medical records. If the client is not approved for accelerated underwriting, the application continues to be underwritten down the traditional path. An insurance exam is ordered, and medical records are possibly ordered. The reason why the client did not qualify for traditional underwriting is not told to the agent. A letter is sent to the client.
Both programs, especially when they work together, can save the agent and client a lot of time. However, the agent needs to know what type of clients these will work for and set expectations that additional underwriting can be requested once the underwriter reviews the application.
