Financial Underwriting The Road Less Traveled

1
Financial Underwriting The Road Less Traveled

• Steve Bloom, Vice President Chief Underwriter
• New York Life Insurance Company
• Joe Manczuk, Vice President Chief Underwriter
• RGA Reinsurance Company
• M.U.D. January 2008

2
Does it matter?

• Grow the top line/bottom line goals - rewards
• Medical underwriting challenges
• I dont see the big financial cases
• Formulas too restrictive?
• At worst, it will just lapse

3
Fundamentals Today

• Insurable Interest
• Why? Loss/Investment
• Personal
• Business/Key person
• Key Person definition (COLI/BOLI)
• Pension Protection Act
• Charitable
• Growth Market Older Age

4
Follow The Money

• Compliance Issues
• Anti Laundering
• USA Patriot Act
• Source of premium
• Income stream
• Assets
• Inforce life policy, annuity, second mortgage
• Investors

5
Projection of Current Worth

• Growth Rate
• Term - of years
• Cap on years projected?
• Current net worth
• Source
• Reality

6
Complexity

• Product
• Proposal
• Sales Concepts
• Multiple Benefits
• Assumptions/Projections

7
Sales Concept/Specific Sale

• Reputation risk
• Awareness
• Management decision
• Compliance Issues
• Underwriting specific case
• Does it make sense on this case
• Total line
• Verification of current worth/income

8
Impact Medical vs. Financial

• Impact
• Medical underwriting vs. excess exuberance in
  financial underwriting
• Trust
• Optimistic Presentation vs. Fraud
• Questioned/Lost
• Personal vs. Business Insurance
• Financial statements
• The consistent story

9
Verification Of Finances

• Knowledge Independence Accuracy
• Sources
• Producer
• Applicant
• Interview on inspection
• Sincerely, Mildred financial statement
• Compilation
• CPA audited

10
Verification - Degree

• Guidelines and Requirements
• Internal
• Reinsurer/Retrocessionaire
• Variance
• Pending application/Total line
• Age banding?
• Verification of Financial Statements
• Fraud/Misrepresentation
• Reasonable Business Practice

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Risk Management

• Focus on app pending in house
• Mortality Risk Assessment
• Total financial risk
• Multiple apps
• Disclosed
• Competitive
• Additional
• Replacement that does not happen

12
Ultimate Total Line

• Disclosure
• Multi company submissions/stacking
• Impact of premium financing
• Impact of settlements
• Confirmation of total line
• To be placed currently
• Ultimate line

13
Documentation Control

• How was the case financially justified?
• Internal audits
• Reinsurer audits
• Controlling total risk
• How
• When
• Post issue surprises/complications

14
Alternate Universes

• Training Financial Underwriting Risk Management
• Knowledge base
• Internal/External
• Open Source/The Expert
• Tax changes
• Compliance
• Sales Concepts
• Life Policy as another financial instrument
• Audits and financial underwriting

15
And Now

• Questions?
• Quitting Time?