Risk Differentiation Underwriting

Life insurance is often a cruel assessor of mortality. It predicts a client’s life expectancy without thought for feelings, extenuating circumstances or even input from the client. A client with substantial wealth and world class care is often “slotted” the same as a client with nominal wealth and substandard care. The “Law of Large numbers” rules the day and its verdict is final in every way. A client’s wealth and therefore quality of care is considered irrelevant.  This has always and will always be unfair as wealthy clients know this subconsciously if not consciously. A client that spends substantial portions of their wealth on elite health care statistically lives longer than a client who does not (Bloomberg: The Rich are Betting on Living to 100; Ben Silverman 4/20/18).

Introduction of RDU as a Unique Value-Added

SPG Life & Annuity has a singularly focused underwriting team built to recognize specific aspects of a client’s medical history/profile in order to favorably differentiate one risk from the otherwise actuarial grouping housed within life insurance companies……it is branded Risk Differentiation Underwriting (RDU). RDU is a proprietary mortality assessment platform that is focused solely on the individual merits of a client’s clinical profile in contrast to statistical assumptions driven by the law of large numbers. We work directly with the client and their corps of physician care to amplify specific idiosyncrasies of a clinical malady in order to favorably separate that risk from the myriads of statistical data.  RDU actually prompts the physician to become an active participant in the mortality pricing process on behalf of the patient/client rather than a mere provider of objective medical data. 

Although the implementation of life insurance is readily understood as a viable risk management solution tool, the commoditization of product and ancillary insurance company offerings are often times detached from the specific individual requirements of the affluent.  This fact is clearly evident in the current mortality risk assessment environment within the world of insurance company medicine.  For the primary determinant of life insurance pricing is underwriting…. not the insurance carrier nor the insurance product. 

In conjunction with the planning opportunities tied to the impact of estate taxes upon the affluent, the fiduciary responsibility and accountability for the same are at the forefront of delivering unique solutions to complex wealth preservation issues of the ultra-affluent. Our established success in working with estate planning attorneys, family offices and high net worth advisors in this space reinforces our RDU strategy as an opportune practice differentiator, while engaging the highly affluent customer in what often matters to them most; their health and their mortality.

The Facts

RDU is the only program in the industry that is addressing all of these things. Through extensive research on each client “individually” including a personal interview with both the client and their doctor, we are allowing clients to tell their story. Their medical history which is one of the most intimate and important aspects of their life is something clients are ready and delighted to explore. The steps they’ve taken, the great care they’ve shown and the often-straightforward explanations they can provide addressing impactful clinical conditions all combine to provide a dramatically amplified picture of a client’s medical history and prognosis. As a final step in the process, we engage the client’s doctors in crafting a uniquely positioned academic memorandum in such a way that it closes the cavernous gap between insurance and clinical medicine….an information arbitrage if you will, further separating the individual merits of the highly affluent customer.  

Equipped with the clarity, content, and context provided by the client and the physician, we have successfully placed over four-hundred high net worth policies in the past three years. These engagements have resulted in an average premium reduction of 34% for the RDU client and/or the ability to purchase coverage after previously being deemed uninsurable. This process has also resulted in countless referrals, thank you notes and goodwill, which are often (if not always) reflected upon the advisor in the form of more business and effusive praise. A common client comment is: “This is such a breath of fresh air, in the past I have hated going through the life insurance underwriting process, this is wonderful to finally be able to tell my story. What a great experience!”

Conclusion

The goal in the RDU process is twofold. First to reduce a client’s cost of insurance or to provide an opportunity to buy insurance that did not exist in the past. Second is to alleviate frustration the client has felt in the past and in turn to engender the goodwill and professional admiration that comes with the same.  Allowing clients and their corps of physicians to participate in the underwriting process has proven to both reduce cost AND reflect positively on the advisors that gave the client a voice in the process.

The results quite simply speak for themselves.