A time for self-promotion: underwriters play a central role in the life-insurance business, but insurers may not fully recognize their value. (Life/Health: Underwriting Insight).

Many professions associated with the life insurance industry have done an admirable job promoting their craft. The life insurance underwriting profession needs to join these ranks and describe how what it does, matters.

And it does matter. Underwriting decisions impact the most critical issues of our business, from agent retention to an insurer's market niche, from mortality results to a company's ultimate profitability. Yet the underwriting function has taken stiff hits in the industry's attempts to trim costs and speed decision-making on the front end.

In the 1980s and 1990s the underwriting process was streamlined to expedite policy issue .The underlying assumption was that the skill set necessary to stratify risk was not that complex. As a result, many experienced underwriters were "downsized" out of work as companies pushed to reduce expenses. The problem was those making the decisions often did not understand what underwriters do.

The simple fact is that the underwriter sits at the hub of the insurance company's business activities. All the information necessary to create the contract crosses the underwriter's desk. In the risk selection process the underwriter binds the insurance company to pay up to billions of dollars of death benefits. Done too aggressively, the underwriting places in jeopardy the company's ability to survive. Done too conservatively, it drives away good business and the producers who write it. Proper balance demands art and skill.

Of paramount importance is the ability to interpret the meaning of underwriting guidelines and apply them appropriately to the individual. This may appear to be a simple application of a set of rules. Yet, these interpretations simulate skills used by lawyers whose responsibilities include interpretation of laws that govern our activities. Individuals do not fit neatly into boxes. Often one piece of information leads to one conclusion, while another leads to a different conclusion. The art of underwriting involves reconciling this conflicting information to reach a final decision. The underwriter is charged with achieving the proper balance on multiple cases and millions of dollars of business every day.

Even deciding when enough information has been gathered takes judgment. Decisions need to be made on incomplete data and an estimate of outcome rendered. Risk classifications are grounded in actuarial sciences. Mathematical quantification of mortality risk and ongoing research describe tools used by underwriters for the creation and application of risk-selection guidelines. Assuming the worst prevents good business from being issued. Assuming the most favorable outcome might bring excessive mortality results to the company.

Underwriting decisions often revolve around medical conditions. Interpretations of the meaning inherent in the data lead to different decisions. For example, do elevated liver enzymes suggest liver cancer, liver cirrhosis, benign fatty liver changes, hepatitis, benign elevations associated with over-the-counter medications, or recent beneficial exercise? Underwriters also collaborate with medical directors exploring equally likely diagnoses for a set of information; in some instances they read EKGs. They also must study continually to understand new diseases, new diagnostic techniques and constantly changing medical treatments.

Financial issues also may drive the decision process. Underwriting professionals deal with fair-market valuation issues, a subspecialty of the accounting profession. Hours of study are necessary to achieve competency in just this one component of the underwriter's profession alone. They also determine the appropriateness of the amount of insurance via an understanding of business valuation, human life value and producer sales techniques.

Underwriters also are part detective. They need to be able to detect fraud, for example, through signature comparisons between application and exam. Underwriters also need to understand the international scene. They must manage changing global travel risks, including local health and trauma risk concerns as well as the risk posed by terrorism.

Perhaps most importantly, underwriters create the personality of the insurance company. The relationship between the field force and the underwriters involves deft communication. This symbiotic relationship forms the company's distinct competitive position, balancing the appropriate mix of aggressiveness and prudent selection.

But perhaps it's up to underwriters themselves to beat the drum not only for better underwriting resources but also for the wide-ranging skills and expertise they bring to a complicated, captivating and necessary role. Part accountant, part detective, part adjudicator, part actuary, part medical researcher, underwriters shape the financial commitments and performance of life insurance companies. It's a challenging and rewarding job--not only for underwriters themselves but also for their corporate employers.

Douglas A. Ingle is vice president, Mortality and Underwriting Research, for ING Re's Individual Life and Health Operation in Denver. He can be reached at [e-mail].