Why Do Captives Have Much More Restrictive Underwriting?

[TheCaspian]

Why are captives more restrictive?

Is it due to the fact they tend to have more first year agents? More conservative corporate culture? Want to keep superior credit ratings?

Blowning off some steam after a PI of mine got massively tabled.

 

[LGilmore]

Trust me, it works that way for independents too.

I had a rep call me and invite me to a DI sales meeting because the DI market you know, is underserved. They were going to cover new sales efforts.... blah blah blah. I just laughed.

DI market has always been 95% underserved... been that way since I came in 25 years ago.. It's never really improved... Why? UNDERWRITING! The underwriting is so tight for DI that it isn't the sale that is hard, it's having the underwriter approve the case.

It's so bad that it keeps that market underserved by 95% the last 25 years.
Agents get burned by underwriting and can't afford to have cases turned down.

So I feel your pain, but it isn't just with captives.

 

[KidsGotHeart]

Why are captives more restrictive?

Is it due to the fact they tend to have more first year agents? More conservative corporate culture? Want to keep superior credit ratings?

Blowning off some steam after a PI of mine got massively tabled.

This is why I believe so many agents have gone to F.E. and non-med term. Normal UW is such a pain.

 

[CFP83]

This is why I believe so many agents have gone to F.E. and non-med term. Normal UW is such a pain.

sloooowwww dooooowwwwnnn.............
that's a pretty big leap we just made here in this thread and we're only 2 replies in. OP asked why captives "seem" to have stringent underwriting, and now in a few post "many agents have left traditional life insurance to sell burial policies and non-med term"?

I think I understand you sentiment.....I'm sure a few newbies got fed up with medically underwritten and headed for the "simple world", however I would bet a pretty large sum of money that 95% of all life insurance premium written last year in the United States was medically underwritten coverage. In the big scheme of things, simplified issue/non-med/FE is a very small niche within the industry.....it's a very important niche, just a small one.

Finally, the answer to tough underwriting isn't to leave the med-u.w world to forever "charge clients more than they need to be paying." Again, FE/simplified- issue has it's place, we just shouldn't paint with such a broad brush here.

 

[KidsGotHeart]

I will take that bet, especially once we toss group term in there.

 

[bluemarlin08]

Tough uw from the captives have meant many additional sales for those that will shop the case.

 

[meclimit]

Why are captives more restrictive?

Is it due to the fact they tend to have more first year agents? More conservative corporate culture? Want to keep superior credit ratings?

Blowning off some steam after a PI of mine got massively tabled.

Many of the captives tend to be mutual companies, which is why they have strict underwriting.

The effects of lax underwriting standards, table shaving, etc. aren't felt immediately. For stock companies these gimmicks make sales look good and it can help turn the quarterly profits the markets expect. So they relax their underwriting standards to make a quick buck. But in the long run its not good for the company.

For mutuals, a large component of declared dividends is mortality experience. If the goal of the company is to return dividends to the policyowners (the owners of the company), then strict underwriting is a necessity, because that is what gives the company great mortality experience over the long run.

 

[rousemark]

Why are captives more restrictive?

Is it due to the fact they tend to have more first year agents? More conservative corporate culture? Want to keep superior credit ratings?

Blowning off some steam after a PI of mine got massively tabled.

Because they can..The key is in the word "captive", they know their agents have to use them as the only shop in town and cannot shop the business based upon premium, ease of underwriting, company niches, etc prior to taking an app.

 

[Larry Tew]

You guys are WAAAAAAAAY overreaching on this. It can't be quantified either way.

Perception isn't necessarily reality in this case.

 

[CFP83]

I will take that bet, especially once we toss group term in there.

Lol, the original post was referring to individual life insurance....nowhere have we been talking about group coverage. So let me be specific, "95% of all individual life insurance sales in 2013 were medically u.w policies".

Good point though I should have been specific.

Do you know how much nml wrote in new prem last year?
New York life?
Prudential?
State farm?
Mass mutual?

Literally one of these carriers 2013 numbers is a number that would not be too far way from rivaling the entire top 15 in the final expense industry.