Key Roles Within Life, Disability & Health Companies Flashcards
Underwriters
Underwriters determine whether, and on what terms and conditions to issue a requested life, disability or health insurance policy. They can be considered as the “gatekeepers” for the product providers.
The underwriter assembles the information provided in the application and requests further evidence, if required, before they assess it. They then use all of the information to match the applicant to the class of insureds whose loss potential aligns most closely with theirs. This then determines the premiums charged or the policy conditions added.
So, the underwriter deals with probabilities based on the information they are provided, rather than certainties. They rely on statistical information (that the product provider has gathered, or information supplied by reinsurers) that associate certain characteristics or traits with the likelihood (probability) of death, disability or the need for certain health treatment or procedures.
For the great majority of loss-causing insured events, it is impossible for underwriters to state whether an individual will suffer a premature death, disability or health loss within a given time period. If they could predict with such accuracy, there would be no need for pooling of the risks.
Claims processors
The insurance claim is where client expectations are put to the test. This starts with the basic question of whether or not the insurance covers the claim, but also brings in other aspects, particularly the service provided by the product provider, any intermediary or professional adviser, and the actions of the many others who play a part in dealing with insurance claims.
A claim’s success depends on the details of the contract between the insured and the insurer. Because this contract depends heavily on what takes place during the application for insurance, that process can come under scrutiny again when a claim is made – especially the information that the applicant provided, and representations made by the insurer or intermediary about the insurance product.
Claims processors negotiate and settle claims and the process they use varies directly with the nature of the insurance. They request and review evidence to support a claim.
Actuaries
Actuaries are highly trained in financial mathematics and probability. An actuary deals with the business of insurance and is responsible for many areas under life, disability and health insurance. The actuary analyses important data such as mortality, disability, injury and sickness rates and uses that information to calculate applicable premium rates. An actuary is responsible for collecting the data to forecast future risks and see how these predictions will affect various aspects of insurance policies that may be offered.
There are a variety of specific responsibilities which an actuary must carry out on a regular basis.
Complaints Handlers
The life, disability and health insurance industry within New Zealand is aware of the importance of handling any disputes about claims, or for any other reason, in a professional manner.
The various pieces of legislation affecting the industry, and the Code of Professional Conduct required of advisers offering financial advice, have a requirement for the advisers, or the organisations they work for, to have internal disputes resolution procedures to handle complaints. If these are not able to resolve a dispute about a complaint, the insured has the option to refer the complaint to the Insurance and Savings Ombudsman (providing the dispute fits their criteria), or to another dispute resolution organisations.
Their role is to investigate and try and resolve the complaint, following the internal disputes resolution process. They will acknowledge and respond to the complaint and ask the client what they want done to resolve the complaint. If necessary, it will be escalated to a more senior person.
Product Developers
Product developers play an important role in the life, disability and health insurance businesses. They are responsible for developing new products or improving existing products so that the company can meet client’s needs more effectively.
Market research and product research are the starting points for a product developer. By talking to clients and advisers, product developers find out what clients want from a product, how they use it and why they prefer certain product features over others. Developers also assess competitor’s products to identify important features and compare performance with equivalent company products. Research helps product developers identify the key requirements for a new product or a product upgrade.
Advisers and other distributors
In the life, disability and health insurance industry, the financial adviser or nominated representative has a role to provide appropriate insurance solutions to meet the client’s needs and situation.
Financial Advisers and Brokers:
- Usually sell life, disability & health insurance products on behalf of many insurance providers
- Focus on proving an insurance product to meet a client’s specific needs (some may advise on the products of a single provider only).
- Provide objective advice on the right insurance solutions for their personal or business circumstances.
- Complete a needs analysis/fact find and complete research to recommend the right solution
- Act for customers when a claim has to be made.
- Make sure cover is reviewed regularly to reflect changes in circumstances.
Financial advisers and brokers are very similar; however, brokers receive and hold money on behalf of the client/insurer (there are other obligations around this).
Reinsurers
Insurance providers purchase their own insurance to spread and reduce their risk. This is called reinsurance and is purchased by the insurer from a reinsurer. Therefore, the role of the reinsurer is to provide cover for an insurance company to spread the risk of multiple/large claims that could affect their solvency. Reinsurers only deal with insurance companies – they are the insurer of the insurer.
Reinsurance is provided by specialist reinsurance businesses or by underwriting syndicates such as Lloyd’s of London. All reinsurers in NZ are foreign owned with only two having local branches. More than 10 major reinsurance companies participate in the reinsurance of New Zealand insurers. In addition, syndicates at Lloyd’s of London also underwrite risks. Most reinsurance companies primarily underwrite general insurance risks, with some life insurance risks. There is only one reinsurer in the world who solely reinsures life insurance risks.
