From Resource, March 2003
Copyright by LOMA
Metamorphosis
In North America, life and health risk management is undergoing a dramatic transformation.
By Hank George, FLMI, FALU, CLU
President, Hank George, Inc.
The new millennium brought with it great opportunities and unique challenges for our industry. This article will focus on those aspects of opportunity and challenge that have come together to catalyze what can only be described as the ongoing “metamorphosis” of how North American life and health insurers appraise insurability and process new business.
Some Challenges
New distribution modes: The traditional agent/broker system has come to be augmented by novel ways of marketing our products. The Internet, bancassurance, direct mail, telemarketing, worksite sales and other alternative avenues of reaching potential customers are coming to play, with each passing year, a greater role in life and health product sales.
For the most part, the success of these new distribution channels is incompatible with the traditional way in which we determined insurability in the 20th century. They demand faster, more customer-friendly and less expensive alternatives. Fortunately, the elements needed in this regard have been gradually evolving from seeds sown in the last two decades of the previous century (see below).
New technology: The electronic age affords us the capability to transform risk management decision-making from (in some cases, literally) “seasonal” to (again, in certain scenarios) essentially transactional. Insurers will want to cautiously embrace what technology offers, making sure as they do so that they re-examine the entire new business process. Settling for the alluring “quick fix” will not maximize the opportunities potentiated by technology. Even worse, such “band aid” approaches could paradoxically cause existing new business infrastructures to actually become less efficient.
New visions: The vast opportunities inherent in both domestic multicultural and international markets are attracting more and more commitments from insurers. Realizing these opportunities will require many—and sometimes radical—changes in our traditional marketing, sales, risk management and new business processing protocols.
The same is true for making the most of opportunities afforded to us by new products. Case in point: critical illness insurance in the North American market. Those who have truly learned from the past (e.g., bumps encountered along the slow road to success for long term care insurance) will be able to sidestep similar pitfalls and thus see critical illness realize its clear destiny as an affordable and essential component of our customers’ insurance protection portfolios.
New issues: Concerns for privacy and confidentiality, fueled in part by the emergence of genetic testing and gene therapies, will need to be reconciled with how we gather and assess evidence of insurability. The net impact here will likely motivate insurers to minimize their present over-dependence on records from attending physicians as their primary risk selection resource.
New imperatives: Business acquisition costs loom as a major consideration. In this regard, a sizeable portion of both out-of-pocket and hidden expenses relates directly to traditional risk selection and new business processing practices. The capacity to transform these essential components of writing and placing in force new coverage is now at hand. Forward-thinking carriers will be characterized by their willingness to embrace novel approaches to reconfiguring the appraising and processing of their new business.
Seeds of Change
In the last two decades of the 20th century, a number of largely unrelated events occurred within the domain of risk management. These disconnected events, in sum and substance, paved the road to essential change for insurers. A brief examination of these events will set the stage for more in-depth discussion of today’s most innovative practices.
Smoker/non-smoker and “preferred risk”: In the late 1970s, a handful of insurers on both sides of the world’s longest undefended border undertook careful assessments of the actuarial and marketing potentials for making an insurance pricing distinction between applicants who smoked cigarettes and those who abstained from this practice. The outcome was the introduction of our first “smoker/nonsmoker” coverages.
Gradually, as this practice gained wider acceptance, some insurers courageously expanded their definitions of “smoker” to include the use of all types of tobacco products, even oral tobacco (chewing tobacco, snuff). With the advent of nicotine-based therapies for quitting smoking, insurers further amended their definitions to encompass current use of all non-tobacco nicotine delivery systems. The number of such modes of nicotine delivery has expanded dramatically and now includes transdermal patches, gum, nasal and oral sprays and lozenges (not to forget several creative alternatives such as nicotine-laced bottled water and lollipops that have yet not been officially sanctioned for use in the United States).
This underwriter distinctly recalls a letter to the editor of a major medical journal in which the physician-author praised “smoker/nonsmoker” policies as a worthy innovation in our industry. Without doubt, there was much of this kind of formal and informal feedback to insurers. The collective effect of such encouragement undoubtedly contributed to the next “customer-friendly” enhancement in life (and now, health) risk management: a phenomenon we call “preferred risk.”
In the 1990s, “preferred risk” sent a powerful message to prospective policyholders: if you are attentive, in a healthful way, to certain modifiable and measurable mortality/morbidity risk factors (weight, blood pressure, cholesterol level, driving record and so on), your efforts will be rewarded with notably lower premium rates for at least certain types of coverage.
What began as an experiment with one preferred class soon exploded into an array of variations on this theme, giving rise to such intriguing entities as “super-preferred,” “preferred-smoker” and so on.
All of this, of course, was based on sound evidence derived from both insurance industry studies and the clinical medical literature. Such evidence clearly showed that those who presented with more favorable risk factors enjoyed, on average, greater longevity, less lifelong morbidity and a higher quality of life.
By the end of the 20th century, “smoker/nonsmoker” (more accurately, “user/non-user;” given that non-tobacco-derived nicotine consumption was also included in most insurers’ definitions) pricing was already being received with growing enthusiasm outside North America. This trend continues to gain momentum on six continents.
We also now see growing worldwide interest in the “preferred risk” concept. Insurers in Asia, for example, realize that the concept of being deemed a “preferred risk” should have the same intrinsic appeal to a high-powered clientele from Japan, China or India that it has to their peers in the United States. Toward this end, the subject of “preferred risk,” as well as other innovative 21st century risk management strategies, are being profiled by experts this month at LOMA’s 3rd International Underwriting Congress in Singapore (see sidebar).
HIV screening to widespread use of laboratory testing: In the mid-1980s, driven by widely proclaimed concerns for the anticipated adverse impact of the AIDS pandemic, insurers began to greatly expand their use of blood testing as a requirement for life and health insurance. As they did so, most carriers chose a multi-component blood testing protocol known simply as a “blood profile.” Such a profile would typically include—in addition to a screening test for infection with the HIV-1 virus—tests for blood lipids (cholesterol, HDL-C, triglycerides), high blood sugar (diabetes), liver function, kidney function and so on.
Once insurers began to study the protective value of blood testing, they found that certain components paid off handsomely. Some of them (cholesterol, blood glucose) became key elements in defining what constituted a “preferred risk.” Others, such as the liver enzymes, were relied upon as markers for possible undiagnosed (or perhaps undisclosed) chronic diseases, as well as excessive intake of alcohol.
The net result was that blood testing became a fixture in virtually every com-pany’s risk selection model, typically at a relatively low face amount threshold.
As insurance underwriters became comfortable with making use of blood test findings in their work, the laboratories serving the industry began to develop and market what have come to be known as “reflex tests.” Home office underwriters order these tests when they encounter specific abnormalities on a screening blood profile.
One widespread example of this practice is the further testing of proposed insureds having an elevation of a liver-related blood enzyme known as ALT (alanine aminotransferase), for antibodies to the hepatitis C virus. ALT elevations are often, but not always, due to liver cell injury. A significant percentage of individuals who have been screened for life insurance with a routine blood profile and found to have raised ALT level have been shown to harbor telltale evidence of chronic hepatitis C infection. Because chronic hepatitis C is now the leading cause of life-threatening liver failure as well as liver cancer, the presence of chronic infection has significant implications for insurability.
Another emerging example of reflex testing involves the use of a test whose merits were recently touted in national news magazines. Known as high sensitivity C-reactive protein (hs-CRP, for short), this test detects subtle degrees of inflammation that cardiologists now know are associated with a greatly increased risk of a heart attack.
Underwriters will soon be using the hs-CRP test to make the most competitive offers possible to proposed insureds who have survived a heart attack, as well as those who have had coronary bypass and cardiac angioplasty procedures. They will also order this test to further evaluate individuals who have certain unfavorable factors (minimally-elevated cholesterol, for example) in their risk profiles. The underwriter will be hoping to be empowered by a normal hs-CRP reading to conclude that the risk implications of such adversities may be minimized and the insurance coverage thus approved for issue on a “preferred risk” basis.
It is reasonable to conclude that blood testing, in the late 1980s and through much of the 1990s, was a clear necessity if only as regards the AID pandemic. However, there was a flip side, so to speak, to the use of blood profiles and reflex tests.First, blood testing was held by many to be distinctly customer- unfriendly as it involved the use of needles.
Second, blood testing requires the services of a skilled medical person—physician, nurse or phlebotomist—and that, of course, mandated that all life and health insurance applications requiring a blood profile needed to have an appointment arranged for a blood sample collection. This had a dampening effect on the development of more rapid modes of underwriting.
Finally, blood testing was relatively expensive. That is, compared to alternative bodily fluid collection methods that came into prominence late the 20th century.
One such “alternative fluid” is urine. In fact, urine testing had once been the mainstay of laboratory screening in life insurance, long before the AIDS pandemic came to be appreciated. In those days, it was quite customary for agents to collect urine samples from proposed insureds and send those specimens off to their respective home offices for basic chemical and microscopic urinalysis tests performed by company employees.
By the 1990s, industry laboratories had almost completely replaced in-company testing and the opportunity for wider use of urine screening was recognized. This became a practical reality when the U. S. Food and Drug Administration approved HIV-1 screening and confirmation tests performed on a urine specimen.
The same approval was extended to a more novel testing modality: oral fluid. This fascinating laboratory test alternative will be discussed in more detail further on in this article. For now, suffice to say that oral fluid testing has captured the imagination of the life and health insurance industry!
Inspection reports to teleunder-writing: For many years, insurers relied upon inspection reports, performed by outsourced providers who specialized in this task, as an intrinsic part in the risk assessment process. By the early 1980s, some companies began to experiment with the telephone as an alternative means of gathering the same basic information. This, in turn, gave rise to telephone interviews that essentially reprised all risk-related questions on the insurance application.
The fly in the ointment—redundancy—soon became obvious.
The same questions asked by the medical examiner or the producer were being asked, once again, more or less in their entirety, by a telephone interviewer. And while this process unearthed tidbits of protective information, the problem of redundant questioning, with its adverse effect on customer satisfaction levels, became a nagging one.
In the last decade of the 20th century, the first experiments were being undertaken which would soon give rise to a new phenomenon that has come to be best known as “teleunderwriting.” This radical reconfiguration of the risk information acquisition and utilization process, which is now the “hottest topic” in life and health insurance risk management, paved the way for eliminating the expense and inconvenience of prior redundancies and thus set the stage of the necessary transformation of the risk appraisal and new business work flow processes.
Task force 72: In the mid-1990s, this underwriter had the privilege of chairing an informal task force made up of chief underwriters, physicians, actuaries and others. The challenge to this group was to look toward the future and ask how life insurance underwriting might come to be modified and enhanced in the early years of the present decade.
When members came together for the first time, they elected to take the name “Task Force 72.” The choice of the number “72” in this context was not driven by the number of members (which was barely a dozen) or by the year of the group’s origin (which was decades after 1972). Rather, it was chosen simply because it was the average of the estimates of task force members as to how much time a typical life insurer would have, from receipt of a $1,000,000 life application on a 35 year old to completion of the risk appraisal of that application, in the year 2003.
The agreed-upon interval was 72 hours.
A radical number, when you consider that at the time it was not unusual for an application of that size to take anywhere from two to 10 times that long to be underwritten, approved and issued in a typical American life insurance company!
To accomplish this goal would require many changes in prevailing risk appraisal paradigms. It would also mandate the embrace of the latest technology as well as new aspects of underwriting science. And, furthermore, it could not realistically be accomplished without a major transformation in the posture—for want of a better term—of the individual who ultimately drove the whole process. That individual is the home office underwriter.
Underwriter to risk manager: The term “underwriter” owes its origins to a time in the 19th century when to be “an underwriter” (primarily in the context of insuring property, not lives) meant putting one’s own funds on the line at the time the degree of risk was ascertained. The home office underwriter of the late 20th century, thankfully, was not put in such a disquieting personal financial position!
This being acknowledged, however, one must also recognize that the lot of the late 20th century underwriter wasn’t always what it could be. This was true, in part at least, because that beleaguered soul was all to often described by his colleagues in the field, in jest and good humor (for the most part) of course, as being in the service of the “sales prevention department!”
Why?
Because the underwriter was forever being perceived as standing astride the income stream of the company, meticulously (and too leisurely) inspecting units of potential revenue. Some might even have been emboldened enough to say that the underwriter was sequestered in an “ivory tower,” employing mysterious rules fashioned by sales-insensitive actuaries and doctors to render inflexible decisions. Decisions, to continue the analogy, which all-too-often had the effect of transforming anticipated commissions into lost sales!
The 21st century underwriter, on the other hand, is now evolving a posture that might better be designated as “risk manager.” While he still has final accountability for assessing risk, he will also now play the key role in managing the flow of new business, literally from the inception of the sale to the facilitation of policy delivery.
By way of an analogy, think of this in terms of an American football player, standing in or near the end zone, about to receive the kick-off.
Imagine that the kick-off is the producer transferring the unit of business to the newly designated “risk manager,” who will take that unit of new business and traverse the playing field (that is, complete the process of transforming said unit of new business into a deliverable policy). In so doing, he will handle himself, or delegate to his subordinates, or (increasingly) transfer to outsourced resources, all of the tasks necessary to, in effect, complete the sale. Throughout it all, the risk manager will retain accountability for the outcome, a job that is not completed until the policy is approved, issued, explained to the client as needed and the placed (and sustained) in force.
The producer, who was formerly called upon to undertake an incessant range of mundane tasks in support of this process, will now be “liberated” to sell more insurance.
The underwriter, now transformed into a risk manager with (as it has become fashionable of late to say) ownership of the entire new business process, is positioned to maximize the use of resources and procedures that allow for much faster and much less costly approval-and-issue sequence.
What has just been described is the basic template upon which the phenomenon we have chosen to call teleunderwriting works its magic.
Teleunderwriting Ernest A. (Ernie) Testa, former vice president and chief underwriting officer for Prudential of America, was one of the architects of the teleunderwriting process.
Today, he is a principal in a consulting firm (Soarant LLC) that specializes in working with life and health insurers to design and implement this process.
When I asked Ernie to define “teleunderwriting,” he responded by saying he considered this term a misnomer. While it conveys the impression that the telephone plays a key role in gathering risk information (and it does), Ernie observes that teleunderwriting “can and should be much more than this.” He maintains teleunderwriting should be seen, first and foremost, as “a more desirable process for customers to buy insurance products and for agents to sell them.” Ernie stresses that teleunderwriting is not just a technology issue or merely an underwriting issue but rather “a better way to conduct business.”
I also asked Ernie what he considered the greatest pitfall awaiting insurers who sought to adopt teleunderwriting. In his reply, he cautioned against what he called “layering of incremental changes on top an already fragmented process.” Ernie believes the core issue here is not a paucity of the budgetary resources needed to adopt tele-underwriting but rather a “lack of a unified commitment to a unified strategy for acquiring and servicing clients.”
Ernie holds to the belief that “risk assessment will continue to be an important element of product design for most, if not all, distribution methods.” In other words, he is saying that the task of assessing insurability (often seen as an obstacle to effective selling by those whose come from outside the life and health industry) remains essential to doing business profitability.
This underwriter firmly agrees.
The insidious nature and extent of antiselection (defined as the purchase of insurance by individuals who are significantly impaired and who seek to conceal evidence of their impairment at the time they attempt to purchase insurance) has, unfortunately, eluded the “radar” of some insurers in recent years.
When one can—and, indeed one can, at this writing—purchase via the Internet inexpensive home test kits to detect the presence of nicotine, as well as hepatitis C and HIV-1 antibodies, in a simple urine sample, then the need for adequate underwriting remains as strong as ever.
Ernie urges life and health insurers to focus their main attention on “effective process design.” When this is done “in concert with the use of new underwriting tools, techniques, data and information,” he believes the result will be less costly risk assessment, improved mortality/morbidity results and faster, more efficient new business processing.
Once again, this underwriter could not agree more.
Oral Fluid
One of the major underwriting tools to emerge in the 21st century as a dominant risk management resource is oral fluid testing. Sometimes mis-labeled as a saliva test (please note: the actual substance assayed is, technically, “mucosal transudate,” elicited during a simple and painless collection process), oral fluid is a medium that can presently be used to screen for three key risk components: tobacco/nicotine use, cocaine ingestion and infection with the HIV-1 virus.
Dr. Sam Neidbala is chief science officer of Orasure Technologies, the firm that holds the patent on an FDA-approved oral fluid collection device widely used in insurance testing in North America. He reports that 20 to 25 percent of all insurance laboratory tests now performed on this continent are done with oral fluid specimens. Oral fluid testing is approved for use in all 50 U.S. states and, it is interesting to note, last year over half of all HIV testing undertaken by U.S. public health laboratories was also done using oral fluid.
The biggest advantage conferred by oral fluid, as compared to blood testing, is inherent in the fact that oral fluid specimens are readily collectible by agents and brokers at the point of sale. It is estimated that over 95 percent of all oral fluid samples gathered for underwriting purposes in the U.S. are, in fact, gathered in by producers themselves. In Mexico, where the use of this testing alternative continues to grow rapidly, all oral fluid specimens are said to be agent-collected.
Are producers are amenable to collecting these samples? So far, the evidence suggests they are, in part at least because oral fluid collection is fairly quick and quite clean.
It is instructive to note in this context that a survey of over 500 agents was undertaken in mid-2002. It documented an 84 percent satisfaction rate on the part of agents and brokers with oral fluid and the prevailing testing protocol wherein they collect 19 out of 20 specimens. One would think this would be a dramatically higher approval rating than one would likely get from those same producers (not to mention their clients) if they had been asked instead about the use of blood tests!
The growth of oral fluid testing outside North America in the years ahead will likely be predicated on several factors.
First, it is realistic to assume that, in many insurance venues outside North America, there will be some degree of discomfort/resistance, at least initially, at the prospect of asking agents and brokers to collect oral fluid specimens. Thus, the growth of a sufficient risk management infrastructure in these markets will be a necessary precursor to widespread use of oral fluid testing. Infrastructure refers in this context to the presence of paramedical services capable of facilitating oral fluid collection – not to mention performing other key risk-related functions such as physical measurements, blood collection where needed and (until teleunderwriting is put into place) the taking of medical histories.
Second, the rise of oral fluid testing will require more forthright appreciation of what has now been proven to be the reliability of oral fluid testing—as an alternative to blood or urine—for providing valid results for HIV-1 antibody screening and confirmation. It is this underwriter’s belief that the advantages of oral fluid screening have yet to be candidly acknowledged, despite the abundant affirmative evidence and actual operational experience in North America, in certain regions of the insurance world.
And finally, the role of oral fluid testing is certain to be enhanced by the potential for adding two key test components to the testing protocol. These are tests for hepatitis C antibodies and the aforementioned emerging marker for inflammation and coronary artery disease, high sensitivity C-reactive protein (hs-CRP).
According to Dr. Neidbala, the reliability of oral fluid-based hepatitis C screening tests has already been proven and he describes the technological aspects of testing for antibodies to this virus as accurate and sensitive, based on independent studies reported on in the scientific literature.
The blood test for hs-CRP is already playing a major role in clinical medicine. It will be used, as explained earlier, as a reflex test in scenarios where underwriters need to embellish their assessment of the coronary risk status of applicants. It is now known that hs-CRP may be detected in oral fluid. If the means to quantify this substance in an oral fluid medium are developed and refined, it is not outside the realm of possibility that life, health and critical illness underwriters will have yet another prized resource in their risk management armamentarium.
Pharmaceutical Profiles
Nearly a quarter of a century ago, this underwriter found himself lecturing to audiences of life insurance agents, endeavoring to illustrate how underwriters could use accurate information about medications being taken by clients to avoid delays and issue policies.
Using the simple “equation” (Rx = Dx), I explained that if I knew, in the context of a given medical history, that a physician had prescribed drug A as opposed to drug B, there were many scenarios where this revelation might enable me to make a faster (but no less valid) underwriting assessment than if I had to resort to tracking down medical records.
While Rx information can now be gathered highly efficiently from insurance seekers through the use of well-scripted telephone interviews, there is a new resource, which has recently emerged in this domain as well. This new resource is being offered to U.S. insurers by service firms. In an effort to better understand what this resource is, I interviewed an old friend and former colleague, Tom Bienvenu, who oversees one proprietary form of this resource.
Tom is executive vice president of Canadian and international operations for LabOne Insurance Services, a major provider of insurance underwriting resources and services based in suburban Kansas City. One of Tom’s major accountabilities is to manage the development and marketing of a product that permits insurers to actually learn the essential details of the recent prescription Rx histories of many prospective insurance buyers.
This Rx information comes via firms known as pharmacy benefit managers (known as PBMs). These firms, in turn, gather information from pharmacies nationwide that are linked into their respective channels.
Insurers who embrace this novel resource for underwriting purposes incorporate disclosure of its use into the authorization signed by the insurance applicant. Furthermore, according to Tom, firms using this service “may not take an adverse action based solely on the prescription history” they have secured in this manner. Rather, they must confirm all unfavorable information with another source before they opt to rate, rider or decline coverage based on that information and its risk implications.
The most significant “good news” about this new resource from the insurer’s perspective derives from the fact that when a favorable Rx history is affirmed, it allows for much faster application approval than would have been the case if expensive and tediously slower information had to be pursued as an alternative.
This underwriter sees huge potential for expanding the use of pharmaceutical information in all of its forms—prescription drugs, over-the-counter medicines and alternative/complementary remedies—to greatly speed up risk selection while also enhancing the accuracy of the appraisal process. Even more intriguing is the prospect that the capacity to make efficient use of Rx information, in context with other rapidly acquirable underwriting resources, should serve to facilitate new product designs, especially for life insurance sold through non-traditional channels.
I asked Tom where this service stood at the present time as regards the viewpoint of regulatory bodies and privacy/confidentiality initiatives. He responded that “the key to compliance is proper consent,” saying this his firm will continue to diligently research the law and work with both the PBM providers and insurers to ensure proper compliance.
All that remains, it would seem, is for essential resources to be designed and made commercially available that would maximize the risk manager’s capacity to effective make use of Rx information. The resources available for underwriting purposes, at this writing, are not yet what they need to be because we must rely solely on tools designed for clinical medical use.
Some Issues Ahead
Health habit underwriting: Now that insurers have developed and refined the “preferred risk” concept, the time is at hand for another component to be added to this domain. In 1980, a prominent Canadian actuary urged his countrymen to consider the merits of what he chose to call “lifestyle underwriting.” Today, the term “health habit underwriting” seems to be a more accurate way of describing this exciting new alternative.
Medical studies have shown that when a middle-aged male or a post-menopausal female (after checking with their physician and getting a “green light” to proceed) takes an aspirin a day for the purpose of reducing the risk of having a heart attack, this voluntary intervention confers definite benefit. The same may be said, many studies reveal, of engaging in leisure physical activity, eating a balanced diet, making temperate use of alcoholic beverages (where such use is not inappropriate due to prior abuse or dependence) and—believe it or not—even owning and caring for a pet!
What if some of these desirable health habit choices could be factored into our risk selection paradigms?
What if this approach could be extended to include reliable evidence that proposed insureds are compliant in taking medications, as well as with recommendations from their physicians to undergo periodic screening tests? Mammograms, stool occult blood tests and even stress electrocardiograms are widely used to detect silent disease before that disease becomes symptomatic and/or life threatening. Thus, individuals who follow their physicians’ advice and have such tests should be better risks than those who refuse.
These kinds of innovative health habit underwriting steps were not practical in the past simply because the vast majority of medical histories were recorded by producers. However, as more and more risk information is now being gathered by telephone, they certainly are viable today. This underwriter steadfastly predicts they will find their ways into the risk management protocols of progressive insurers worldwide in the years ahead.
Outsourcing: It is equally clear that outsourcing can and should play an enhanced role in many aspects of life and health risk management in the years ahead. Its impact will be felt broadly, from telephone interviews and the collection of medical records to the transfer of the accountability for the actual underwriting and processing of whole lines of business to firms that offer extensive risk management know-how on a cost-effective basis.
In fact, this process is already taking off dramatically in the United Kingdom. In a recent visit to the U.K., this underwriter saw firsthand the extent to which life and critical illness carriers have opted to avail themselves of outsourcing providers of risk appraisal services.
With the continuing development of outsourcing-friendly technology, anchored by telephone and Internet-mediated interviews, this natural evolutionary process in risk management can only be anticipated to accelerate.
Continuing education: In the 20th century, insurers relied predominantly on in-house experts and “value-added” services from reinsurers to provide for the continuing educational needs of their underwriters and claims examiners. These historic alternatives no longer suffice for the needs of most insurers.
In the 20th century, at a time when staffing levels were high and resources abundant, most reinsurers provided a wide range of “free” (or nearly so) services for their direct-writing clients. While some of these have been preserved, the fact is that there is much less to go around than there was only a few years ago. And, there are apt to be more strings attached as well.
Providing for continuing education with in-house resources is equally problematic.
As an example, consider the true costs involved in developing a worthwhile CE program for a staff of 10 home office risk managers.
To assure that they receive the latest and most essential information, formatted to assure ease of comprehension and high retention, requires a considerable diversion of precious (and likely over-committed) expert resources. It has been reliably estimated that the aggregate cost of preparing and implementing an adequate CE program in-house for a team of underwriters would be US$ 25,000 to 50,000, if indeed not more.
By way of contrast, the net out-of-pocket cost of obtaining equivalent continuing education, designed specifically for life and health risk managers and offered on a fee-for-service basis by outsourced providers, could be as little as five percent of the steep price tag imposed by virtue of using in-house resources.
Professional consciousness and connectivity in a shrinking world: At the present time, there are perhaps a dozen national “underwriting” associations, ranging in size from the U.S. Association of Home Office Underwriters (AHOU) and the Australian Life Underwriters and Claims Association (ALUCA) to growing organizations in the Philippines, Mexico, the Caribbean region and elsewhere. It is hoped that many more such associations will be launched, nationally and regionally, in the years ahead, thus creating priceless opportunities for the professional development of risk managers.
Beyond this, however, we need to find a basis for creating viable and effective links between all underwriters, worldwide.
Some efforts in this direction are already bearing fruit.
The underwriting professional journal ON THE RISK, having in place a team of international editors and featuring a growing percentage of international content in each quarterly issue, is contributing here.
As is LOMA’s International Underwriting Congress (IUC), which endeavors to bring together risk management professionals from over 60 countries for three days of education and networking, every two years.
Now professional underwriters need to take this task to its next logical steps.
One is to create an ongoing basis for dialogue among the leaders of existing national and regional associations. This underwriter is convening a luncheon meeting in Singapore, the day before the start of the 3rd IUC, to be attended by representatives of most national/regional underwriting associations. The purpose is to find ways to achieve sustained inter-association sharing and to set the stage for further cooperation worldwide.
The other key step is to encourage and facilitate connectivity between underwriters and peers in other risk-management-related professions. In Australia, underwriters and claims analysts already share a common organization. This concept can and should be extended to create links and forge bonds between underwriters, claims examiners, insurance medical officers and even some individuals from the actuarial community.
It is toward this goal that this underwriter and a growing number of others are now dedicated. If you agree that more needs to be done to connect risk management professionals worldwide, contact me at hankgeorge@aol.com.
In the meantime, I would like to thank Ernie Testa of Soarant LLC, Tom Bienvenu of LabOne, Inc., and both Dr. Sam Neidbala and Kip Whitefield of Orasure Technologies, Inc. for their kind assistance in the preparation of this manuscript.
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