The importance of understanding underwriting better

When you trained to be a financial advisor, you learned how to find and solicit prospects, discover their gaps of need and close the sale. But your regimen probably did not include even a lecture about field underwriting.

“No one ever taught us about underwriting. It was all trial and error,” said Julian H. Good Jr., CLU, ChFC, a 40-year MDRT member and MDRT Past President from New Orleans, Louisiana, USA. “You just have to be curious about how it works. If you want to be in the life, disability or long-term care insurance business and don’t have the patience to do underwriting, you should find another career. That’s why so many [advisors] are more interested in wealth management and selling investments today — because there is no underwriting involved. If the client meets the criteria for investing in whatever product or service they’re recommending, the sale can move forward.”

Field underwriting or pre-underwriting is the initial evaluation by an advisor to determine where a client falls within an insurance carrier’s tolerance for risk. While it is labor intensive and time consuming, field underwriting can improve the likelihood of placing a case, boost your credibility with carriers, help set reasonable expectations with clients and even garner better case ratings for them.

Reputation enhancer

“When I first got into the profession and was writing up my first big case, a senior advisor told me that you need to help the underwriter understand the level of risk they’re getting involved in,” said Rickson Joel D’Souza, a 19-year MDRT member from Dubai, UAE. “Most of us think of the underwriter as the business interruption officer whose job is to not clear the case if they see any possible risk. He made me understand that we are field underwriters. Our job is to be their eyes and ears and to see the [applicant], because the underwriter only gets access to the application.”

There are no secrets to being a good field underwriter. Just use the skills advisors already have for asking questions and winning trust and then go as far as you can to do something great for the client, Good said.

“Do things like this and you stand apart from other advisors,” Good said. “You’re becoming a professional, world-class underwriter — someone who is not just interested in doing the right thing but making sure it’s good for everyone. If it’s good for the client and it’s good for the carriers because you’ve done the right job, that’s going to equal profitability later.” 

This was excerpted from the January/February 2024 Round the Table article “Lead with transparency.”

  • Zeshan Aslam says:

    Excellent! Addressing the “Why insurance” leads the prospect to answer “when to purchase” and at the same time Consultant to answer “how much to purchase”. All this needs to be a good field Underwriter first, knowing the prospect and the Insurable interest between him and the Insurer, is a must thing to process the Insurance proposal, knowing that you are a bridge between prospect and the Underwriter simply put you one step ahead.
    This was always an amazing job to understand the underwriting process and putting myself in a place where I can address the Insurable Interest to the prospect, rest assured is a continued good business.

  • Julian Good’s comments about the difference between underwriting a case and managing money are brilliant.
    Oftentimes, the key to understanding the Who, What and Why to a case is found in the cover letter (even if the Underwriter doesn’t read it.)
    D. Scott Brennan
    South Bend, IN

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