Transcript New Business Submission Strategy

Working the Large Case
Market:
Retention/Reinsurance
and Case Preparation
Sue Pirog, AALU
Managing Senior Underwriting Director
Insurance products are issued by: John Hancock Life Insurance Company (U.S.A.), Boston,
MA 02117 (not licensed in New York) and John Hancock Life Insurance Company of New
York, Valhalla, NY 10595.
© 2013 John Hancock. All rights reserved. MLINY110613041
For Agent Use Only. Not to be used with the public.
Case Preparation
• Jumbo management
• Medical
• Financial
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Handling Jumbo Cases
“More than ever before, Jumbo case
underwriting relies heavily on mutual
education and cooperation from all parties
involved in the process – from solicitation to
delivery, it should be a collaboration.”
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Definitions
• Industry Jumbo Limits:
– The total amount of inforce and pending formal
applications – including life settlement coverage – with all
companies, including ultimate increasing amounts; also
includes all amounts that are being replaced, both
internally and externally
– Jumbo limit for U.S. residents is $65MM ages 0-80
– 81-85 Jumbo is $50MM
• Reinsurance:
– Insurance for insurance companies
• Retrocessionaire:
– Insurance for reinsurance companies
• Total Line Coverage:
– Total amount applied for and inforce with all companies
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Definitions (cont’d)
• Retention:
– The maximum amount of risk at a given age and underwriting
classification that a company will retain on any one life
• Automatic Binding:
– Ability to cede the risk to the reinsurer without the reinsurer
having to evaluate the case. Limited by inforce, amount
applied for with all companies and rating classification
• Facultative Cession:
– Any case sent to a reinsurer to obtain an offer of coverage.
Reasons for submission include medical, financial, aviation,
avocation, occupation, capacity, excess of internal binding
and Jumbo Limits
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Retention
• Today’s marketplace
– More companies hesitating to offer up their own retention
on large-capacity cases
– Some companies charge a premium
– Some factors that reduce retention are age, mortality
rating, aviation, avocation, occupation, foreign travel and
residence
• How best to manage your cases?
– Select a carrier that is:
• A leader in retention for all ages and products
• Allows flexibility; assists & partners with you in large
case underwriting, will go the extra mile to assist with
the sale
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Managing Jumbo
• Add it up!
-
Personal, business, settled, IOLI, SOLI … it all counts
Total inforce all companies
Total applied for all companies
Replacements
• All business is considered when calculating the
Jumbo limit
• By treaty a case exceeding Jumbo limits does not qualify for
automatic cession and must either be kept within the
company retention or sent for facultative consideration
• Reinsurers may be limited to their internal retention and have
no retrocession support
• It’s important to understand a company’s position on 1035 &
Replacement rules as it relates to their Jumbo definition
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Managing Jumbo (cont’d)
• Consequences to the direct writer when Jumbo was
exceeded at time of issue can be significant
– May find they have no reinsurance support and be liable for
the entire amount
– Carriers may rescind the policy
– Could they refuse to pay?
• How can you navigate the large case market?
– Submit a detailed cover letter disclosing all inforce and applied
for coverage. If there is a competing agent, include that
information
– Replacement and type of replacement can impact the amount
of coverage available
– Be clear if you want to keep the case out of the reinsurance
marketplace
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Case Preparation
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Get As Much Information As
Possible Upfront
• The affluent client is often very pressed for time so it’s crucial
to obtain as much information up front as possible
• Ask about “ all” physicians consulted to include dermatologist,
ENT, and other any specialist. Request names of medications
prescribed
• Determine with the help of your underwriter if supporting
documentation will be needed on financial cases
– Particularly in large buy-sell cases, formal company
valuation, and/or business financial statements are very
helpful, so if possible obtain these up front
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Purpose and Need
• We must understand the need and motivation for coverage:
– Does it make sense?
• Once that is established we will look at the owner and
beneficiary designation to support insurable interest
• Supporting information to substantiate the need, e.g.,:
– What is the economic loss?
– How is that loss determined?
– Is the face amount consistent with the loss?
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MVR
• Don’t forget to ask if the client has moving violations
• Often one of the last requirements to come in, and can
sometimes change the offer at the last minute
• If there are any driving issues, be sure to bring it to the
underwriters’ attention when informal is submitted
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Internet Search
• Most carriers now will utilize the internet during the
underwriting process and it can be helpful to you as well
• Useful for gathering financial information (e.g., Forbes listings,
information regarding businesses such as recent mergers)
• Sometimes search will bring up adverse information that will
help you address any issues before formal submission
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More Helpful Hints
• Provide consistent information on the application, financial
statement(s), cover letter and tele-interview
• Provide breakdown of all inforce coverage and increasing
riders, including settled and sold policies
• Complete financial profile disclosure (i.e., cover letter and
Financial Supplement)
• Discuss unique medical or financial aspects of the case up
front with your underwriter
• Set expectations. Walk client through the formal process so
they know what to expect, including script check, telephone
interview, MVR
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Questions?
Talk to your John Hancock Underwriters on
your next large case!
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