Individual company applications can work against consumers by making it harder to shop for carriers.
For example, you complete an application for a consumer for a specific life insurance company but don’t receive the rating the client deserves. Now what?
You now have an application, a paramedic exam, lab results, and medical records. You decide that, in the customer's best interest, you want to apply to another company for a more competitive rating.
You must complete a new application and start the process from the beginning. Why? Company #1 paid for the exam and medical records. The records belong to that company, not the agent or customer. Most of the time, the first company will not release these records.
As a result, agents, brokers, and consumers often settle for a less competitive company and rating and more expensive product. Who wins? It’s never the consumer.
See also: Revolutionizing Life Insurance Uptake in Younger Markets
What a possible solution would look like
- A universal application would provide the most comprehensive information because it would be redesigned to incorporate questions that the most conservative carrier would ask.
- A universal application could also be used as a preliminary inquiry form that can go to more than one carrier simultaneously, saving duplication of efforts.
- The medical records would belong to the broker/agent company that ordered the records and would be available to all underwriters who would review the application.
Obstacles that will need to be overcome first
- Would current HIPAA and compliance restrictions to personal customer information need to be revised?
- Who would pay for the paramedic exam, labs, and medical records, and where would these records be housed?
- Would carriers be able and willing to underwrite a “shopped” application in which they compete to win the business?
Pros and cons to each party
- Carriers: Less competitive carriers will not want this process. Carriers can use their captives to sell less competitive solutions.
- Captive and affiliated producers: This process will encourage and force these producers to consider alternative solutions when their company is not the best fit or offers the best solution.
- Independent producers: This would allow producers to comply with Reg 186 Best Interest Rule by ensuring customers a best-interest look at their options.
- Third-party intermediaries: Their productivity and ability to shop multiple carriers would increase drastically.
- Customers: There are no cons for the customer, only upside. This one application will streamline the process, speed up the underwriting and approval process, give consumers valuable alternative solutions, and comply with the best-interest methodology.
See also: Solving Life Insurance Coverage Gap
Life insurance companies, lobbyists, and regulators
- Who will lead the creation of a comprehensive, universal life insurance application? Will insurance companies be allowed to opt out and maintain their proprietary applications?
- How will HIPAA and compliance guidelines allow for the access and storage of confidential medical records, or will they be revised?
- How will the cost of client acquisition be handled? Who will pay, who will own, and who will be responsible for the compliance requirements of confidential medical and health information?
