Maryland Insurance Continuing Education
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edward hulse asked:
The Underwriting Process
Even though many insurance policies are issued on the basis of the application alone, it is still sound business to explain the underwriting process. The explanation of the underwriting process should include three “checks and balances.
1.        Medical Information Bureau. The MIB serves as a huge clearinghouse of medical information concerning applicants and helps to disclose cases where an applicant conceals or submits misleading medical information.
2.        Inspection Report. This report provides details on an applicant’s lifestyle, finances, and exposure to abnormal hazards. These reports are usually ordered on applicants who apply for large amounts of insurance. Friends neighbors and/or employers may be contacted.
3.        The Credit Report. This report is ordered when there is reason to question the applicant’s ability to pay the premiums and to determine whether or not the applicant may be a poor credit risk.
In summary, the application process is important to all three parties involved; the applicant, the agent and the insurer.
All of the information on an insurance application has a direct bearing on whether the policy will be issued as requested, rejected, or amended. An agent who knowingly fails to provide all the necessary information about a prospect is nor serving anyone’s best interests.
Consider, for example, the agent who “forgets” to disclose that the applicant is a dedicated bungi jumper. The agent figures that if this information is submitted to the insurer, the company would rate the case making it unaffordable to the applicant. A lost sale means lost commissions. Thus, the information is not revealed and the coverage is issued as standard. However, six months later, the insured dies while attempting another jump. The insurer probably will contest or deny the claim, citing concealment. Rather, than receiving the death benefit, the family receives a return of premium. How ethical was the agent? What service did he/she provide?
Precision and accuracy in completing the application are always needed. This will protect both the applicant and the insurer, and protect the agent from any possible liability claim.
Maryland Insurance Continuing Education
Insurance Continuing Education
Metal Kitchen Cabinets
The Underwriting Process
Even though many insurance policies are issued on the basis of the application alone, it is still sound business to explain the underwriting process. The explanation of the underwriting process should include three “checks and balances.
1.        Medical Information Bureau. The MIB serves as a huge clearinghouse of medical information concerning applicants and helps to disclose cases where an applicant conceals or submits misleading medical information.
2.        Inspection Report. This report provides details on an applicant’s lifestyle, finances, and exposure to abnormal hazards. These reports are usually ordered on applicants who apply for large amounts of insurance. Friends neighbors and/or employers may be contacted.
3.        The Credit Report. This report is ordered when there is reason to question the applicant’s ability to pay the premiums and to determine whether or not the applicant may be a poor credit risk.
In summary, the application process is important to all three parties involved; the applicant, the agent and the insurer.
All of the information on an insurance application has a direct bearing on whether the policy will be issued as requested, rejected, or amended. An agent who knowingly fails to provide all the necessary information about a prospect is nor serving anyone’s best interests.
Consider, for example, the agent who “forgets” to disclose that the applicant is a dedicated bungi jumper. The agent figures that if this information is submitted to the insurer, the company would rate the case making it unaffordable to the applicant. A lost sale means lost commissions. Thus, the information is not revealed and the coverage is issued as standard. However, six months later, the insured dies while attempting another jump. The insurer probably will contest or deny the claim, citing concealment. Rather, than receiving the death benefit, the family receives a return of premium. How ethical was the agent? What service did he/she provide?
Precision and accuracy in completing the application are always needed. This will protect both the applicant and the insurer, and protect the agent from any possible liability claim.
Maryland Insurance Continuing Education
Insurance Continuing Education
Metal Kitchen Cabinets
