Leading protection IFA ditches online applications

An influential protection IFA says he is willing to take a commission hit by using only those insurers offering ‘Big T’ tele-underwriting.

Peter Chadborn, co-founder of CBK Colchester, says other systems of underwriting are time consuming and offer too large a non-disclosure and compliance risk, adding he even prefers paper-based applications.

Big T tele-underwriting enables advisers to separate themselves from the interview and medical aspects of a protection application by passing these responsibilities on to an insurer or third party.

It is, however, only offered by some insurers while most have spent millions installing systems enabling advisers and consumers to apply online. Online systems can, for the simplest cases, place an applicant on-risk within half an hour.

But Chadborn says online applications "only add another tier of potential human error". He says, from now on, once CBK has formulated a shortlist of providers offering appropriate policies for his client, the ultimate decision will rest on which one offers Big T.

"Big T is perfect because it properly separates the advice and application process," he says. "The quicker insurers adopt it, the better. I'll get murdered for saying this but I would happily take less commission in exchange for Big T; that is how passionately I feel about it."

Providers charge more for offering Big T processes because they take on the administration costs and liability risks.

Tele-interviewing provider Morgan Ash says more advisers, and even some networks, are using providers because of their Big T capabilities.

"Advisers are looking to give advice and submit the case and, with Big T, there is less work, less liability and a lower risk of non-disclosure," managing director Andrew Gething says.

"It is difficult to understand why more providers don't offer it when you examine the cost-benefit analysis. But then a number of advisers like the online application process."

Alan Lakey, partner at Highclere Financial Services, says: "I do like Big T because it takes me right out of the FOS [ombudsman] loop, but it is not the be all and end all. There can be complications. For example, if a client is declined or rated, I might not know why and have to go back to them. Whichever [underwriting] route you take, there is a downside."

Tele-underwriting is not a new concept and has been utilised in the US for many years. But there are different types.

• ‘little t' Traditional application form filled in by applicant. A follow-up interview if necessary, replacing the doctor's report (GPR).
• ‘Big T' No medical questions on application form. All applicants interviewed by medically qualified nurse, underwriter or tele-operative.