Oxford Declined Question

[donamese]

So, will they6 accpt people that other companies have done their underwriting for them?

It wouldn't work the way you stated for approvals.

Say Oxford charges $100 for healthy, Foresters $120 to allow for diabetics. Diabetic would be approved for Foresters. Your rationale is since Foresters approved them then Oxford should as well...however, they are not charging the extra $20 on everyone to cover that extra risk. Conversely, if Foresters declines them at $120 then would you take them for $100? They may pass your underwriting but there is a definite red flag if the other guy turned them down. With full underwriting you can look deep and get to the root of the problem, with simplified issue you are working on a handful of questions and a couple reports so red flags I would assume are key.

Not saying I like the question on the app, had several people turned down because of it but I can understand some of the reasoning behind it.

 

[jdeasy]

It wouldn't work the way you stated for approvals.

Say Oxford charges $100 for healthy, Foresters $120 to allow for diabetics. Diabetic would be approved for Foresters. Your rationale is since Foresters approved them then Oxford should as well...however, they are not charging the extra $20 on everyone to cover that extra risk. Conversely, if Foresters declines them at $120 then would you take them for $100? They may pass your underwriting but there is a definite red flag if the other guy turned them down. With full underwriting you can look deep and get to the root of the problem, with simplified issue you are working on a handful of questions and a couple reports so red flags I would assume are key.

Not saying I like the question on the app, had several people turned down because of it but I can understand some of the reasoning behind it.

I don't understand and I think it's stupid.

Typical decision made by clueless people. There are many companies with better rates than Oxford that don't have that question. And those companies are also A rated.

They can wallow in their stupidity for all I'm concerned.

 

[donamese]

Time will tell. It is all about claim costs to the carriers and final expense is priced at a loss for 5-7 years so it takes time for the carriers to check profitability. If a carriers start adjusting questions and increasing prices, then they obviously did something wrong pricing wise. We get pissed when apps change, rates increase, but the reality is, the way it was prior was likely losing money for the company. If you are paying out $1.25 for every $1 you bring in are you smart because everyone loves you or are you stupid because you are loosing your ass but don't do anything about it?

 

[jdeasy]

Time will tell. It is all about claim costs to the carriers and final expense is priced at a loss for 5-7 years so it takes time for the carriers to check profitability. If a carriers start adjusting questions and increasing prices, then they obviously did something wrong pricing wise. We get pissed when apps change, rates increase, but the reality is, the way it was prior was likely losing money for the company. If you are paying out $1.25 for every $1 you bring in are you smart because everyone loves you or are you stupid because you are loosing your ass but don't do anything about it?

I ain't buying that story.

 

[donamese]

I ain't buying that story.

That is why you are in sales and not an actuary

I am no actuary but think of just the basics of final expense. Take in $30 a month for $10,000 in coverage. Lets assume the gross commission is 130% FY 10% renewals, you pay out $351 in commission advance, and are on the hook for $10,000 if the person dies. We won't even factor in costs for underwriting, printing, staff, overhead, reserves, etc to keep it simple. If a client dies at 18 months, you paid $486 in commissions, received $540 in premium, and paid out $10,000 in death claims. You are at a loss of $9,946. Since your +/- split between premium received and commissions paid is $54 in that time, you need 184 other lives just to break even from that 1 claim.

 

[gordon112]

Oxford has tighter UW, a very time consuming POS interview and they cut renewals in half. With all that the rates aren't always the lowest and the majority of time its only a few bucks cheaper then the other carriers.

No thanks.

 

[jdeasy]

That is why you are in sales and not an actuary

I am no actuary but think of just the basics of final expense. Take in $30 a month for $10,000 in coverage. Lets assume the gross commission is 130% FY 10% renewals, you pay out $351 in commission advance, and are on the hook for $10,000 if the person dies. We won't even factor in costs for underwriting, printing, staff, overhead, reserves, etc to keep it simple. If a client dies at 18 months, you paid $486 in commissions, received $540 in premium, and paid out $10,000 in death claims. You are at a loss of $9,946. Since your +/- split between premium received and commissions paid is $54 in that time, you need 184 other lives just to break even from that 1 claim.

Then how are other companies able to offer the clients a better deal? You obviously have bought into Oxford's excuses. I haven't. And won't.

 

[donamese]

Apparently you missed the part where I stated time will tell. As stated earlier, final expense is priced at a loss for years, then the numbers begin to work out. How many FE companies have dropped out? Foremost, Shenandoah, Forethought....
How many companies have made rate increases, commission changes and underwriting/app changes?
Think they were all profiting like mad and that is why they left or made changes?

Oxford may be right, may be wrong, time will tell as stated earlier. Just playing devils advocate to some questionable posts like Gordon:

Oxford has tighter UW, a very time consuming POS interview and they cut renewals in half.

Original Street was Yr 1- 105%, Yrs2-10 - 7%, Yrs 11+- 1%
New Street Yr 1- 120%, Yrs2-5 - 5%, Yrs 6-10 - 2%

15% increase in year 1, 29% increase 2-5, 72% increase 6-10
Depending on persistency, it takes until year 9 or 10 to start seeing lesser pay on the new scale than the old. Is this good or bad? Depends on the agent, just like to have facts out rather than false assumptions or half information.

 

[gordon112]

Apparently you missed the part where I stated time will tell. As stated earlier, final expense is priced at a loss for years, then the numbers begin to work out. How many FE companies have dropped out? Foremost, Shenandoah, Forethought....
How many companies have made rate increases, commission changes and underwriting/app changes?
Think they were all profiting like mad and that is why they left or made changes?

Oxford may be right, may be wrong, time will tell as stated earlier. Just playing devils advocate to some questionable posts like Gordon:

Oxford has tighter UW, a very time consuming POS interview and they cut renewals in half.

Original Street was Yr 1- 105%, Yrs2-10 - 7%, Yrs 11+- 1%
New Street Yr 1- 120%, Yrs2-5 - 5%, Yrs 6-10 - 2%

15% increase in year 1, 29% increase 2-5, 72% increase 6-10
Depending on persistency, it takes until year 9 or 10 to start seeing lesser pay on the new scale than the old. Is this good or bad? Depends on the agent, just like to have facts out rather than false assumptions or half information.

There is no advocate here, just pointing out the facts. 105 is didly squat for many independent agents. Your numbers are wrong, I had 120 and 10% renewals 2-10 about 5 years ago.
Most of my carriers are at 120 and higher, and yes the renewals are all much better with those companies then Oxford.

Again, Oxford has a lousy POS interview, crappy renewals, UW is a lot harder then most with these questions that nobody else has on the ap. If you want to go through all the loops and get paid less then go to it. Your in AZ where they are based so its obvious you have a hard on for Oxford.

 

[smokin goose]

That is why you are in sales and not an actuary I am no actuary but think of just the basics of final expense. Take in $30 a month for $10,000 in coverage. Lets assume the gross commission is 130% FY 10% renewals, you pay out $351 in commission advance, and are on the hook for $10,000 if the person dies. We won't even factor in costs for underwriting, printing, staff, overhead, reserves, etc to keep it simple. If a client dies at 18 months, you paid $486 in commissions, received $540 in premium, and paid out $10,000 in death claims. You are at a loss of $9,946. Since your +/- split between premium received and commissions paid is $54 in that time, you need 184 other lives just to break even from that 1 claim.

You're way off. You left out the truckloads of interest the carrier is making on assets. You also left out the lapses after one year. Then factor in the long livers that end up paying in more premium than the policy is worth.