Today I wanted to write about some observations in the personal insurance industry over the last year, particularly in relation to how tough underwriting is becoming.
Generally speaking, medical underwriting seems to be getting harder and harder – by that, I mean that when facilitating clients’ new policy recommendations, it seems to be rare that policies aren’t coming back without exclusions or some form of altered terms.
For those unaware, when applying for personal insurance policies, there is an underwriting process where the insurer assesses you as a ‘risk’ based on your health situation, both current and past. Personal risk insurance policies are certainly not an entitlement, and the insurers take a careful approach when it comes to the policy terms that are ultimately offered to the client. If for whatever reason, you are deemed a greater risk of claim than what is considered a standard risk, then the terms may be offered on a loaded basis. That is, you pay more for the insurance than standard.
Alternatively, if you’ve had a specific injury or pain that affects a certain area of the body, such as the spine or shoulder, the insurer can offer the policy with those body parts excluded.
Medical underwriting is a process that can be frustrating for many. Depending on the requirements, it can certainly drag on and face delays when waiting on medical information from various clinics or specialists. It also seems to me that the process is getting harder – perhaps across the board a more conservative approach is being taken by insurers and/or reinsurers. Or perhaps it's that we as people continue to have a greater awareness or interest in our health.
Add into the mix Covid and altered working conditions, the last year has made it fairly difficult to get policies through at times. With certain insurers, in particular, even the simplest of administrative changes have sometimes taken the better part of a month to process, let alone new applications with full medical underwriting requirements. We have seen extended time delays causing implementation processes in many cases taking months on end.
So, what is a possible solution aside from trying to work and cooperate with medico’s and underwriters in as timely a fashion as possible?
I’m sure many of you potentially reading this don’t have your personal risk insurance arrangements sorted. There’ll always be an excuse to put it off…I’ll wait till I buy a house, or I’ll wait till I have a family, or it's just too hard. One thing is for sure, it will only get harder the older you get. If you get the foundations right early, it's bound to be a much more straightforward process. You set the framework to work off for all of our future insurance needs.
What about those who haven’t yet, and may think it’s too late or their health or past injuries could affect an application? Does that mean it's not worth doing now? Absolutely not! If there is a need for insurance, we are always here to identify where or how we can achieve the best outcome for you. That is one of the advantages of seeking an advised insurance solution specific to your needs and circumstances.
Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email firstname.lastname@example.org or visit www.hewison.com.au
Please note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.