Underwriting as marketing: quicker but still-accurate underwriting can give agents and insurers a sales advantage.

What if insurance companies could lilt the administrative burden of selling life insurance off the shoulders of agents? What if insurers could shave two hours off the time it takes to fill out paperwork and administer the application process? What if agents had more time to do what they do best: selling products and nurturing customer relationships?

Not only is it possible, forward-looking underwriting departments have made it happen. Right now it's possible to go online to get a quote, apply for and bind a life insurance policy in 10 minutes or less, with some restrictions.

Underwriting has become one of the hottest marketing tools today, because insurance companies have come to understand that creating an easy-to-sell (and easy-to-purchase) experience translates into more sales for both the agent and the insurer.

This truism is borne out in industry statistics. While MIB Group reported that U.S. term life applications were down 6% for the first seven months of 2003 compared with the previous year, at least one company has bucked the downward trend with its quote-apply-and-bind Web tool. Its term life applications are up more than 15% this year.

Key to this success story is teleunderwriting. No one would argue that the best value for an agent's time is in selling, not in going over a detailed medical questionnaire with his or her client. Many agents are eager to avoid creating this potentially uncomfortable and embarrassing experience.

Today, about half of life insurers offer agents the teleunderwriting option. The advantage is that applicants can schedule a follow-up phone interview in the comfort and privacy of their own home. A friendly voice on the phone and the feeling of privacy allows clients to be more forthcoming with information. The result is that insurers receive more consistent, thorough and accurate data, thus reducing orders of the widely dreaded attending physician statement.

In some companies that offer teleunderwriting, agents opt to use the tool for up to 95% of applications. These companies report a significant drop in the number of APSs they order. This is good news, because agents who sell life insurance know that ordering doctors' records is the kind of red tape that can add up to a month to the application process. Anything that can eliminate the need for an APS makes the application process quicker and easier for everyone.

While insurance companies have eliminated the need for agents to schedule follow-up interviews, medical appointments and laboratory tests, they recognize agents' desire to track the application's progress from start to finish, so many companies also provide online pending reports or tracking systems.

Other ways insurance companies have used underwriting to improve the life insurance application process--and to boost the sales completion rate--is to provide tools that allow agents to deliver more accurate quotes and complete the sale on the spot.

A decade ago, more than 90% of applicants typically fell into the "standard" rate class. In recent years, more sophisticated underwriting tools have allowed companies to gather more detailed, accurate data. The result is that insurers now offer many more rate classes, including several tiers of "preferred" and "preferred best" pricing.

To help agents find the right rate class, some insurers have added optional "underwriting rating calculators" to their Web tools. This allows agents to painlessly add just enough additional information to help ensure the accuracy of the quote. After all, no agent likes to surprise clients with higher-than-expected rates when it comes time to deliver the policy and close the sale.

Finally, because the life insurance application process can take weeks to complete, it's not uncommon to spend considerable time and resources on the sale only to watch it go up in smoke or-ice it's time to close. The ability to collect payment at the point of sale and to give the client a certificate of temporary insurance is a powerful tool for capturing and completing the sale.

At the peak of the high-tech bubble, the hype was that technology would replace agent/adviser services in life insurance. While there are some direct sales to consumers via the Internet, that market remains limited. By and large, it's still true that "life insurance is sold, not bought." By aligning online solutions, teleunderwriting, underwriting and communications, companies are working to make it easier than ever for agents and advisers to sell.

Mike Madden is assistant vice president of Individual New Business for Safeco Life & Investments, based in Seattle. He can be reached at [e-mail].