Underwriting using the debit /credit system vs Criteria Underwriting
Debit/Credit and Criteria are two distinctly different methods of underwriting preferred clients. They often lead to surprisingly different results as the following case study illustrates:
Case Study:
• Male, NS, 37
• Excellent Health, never smoked, above average fitness
• Father, healthy no major problems age 78
• Three brothers all healthy, non-smokers aged 46, 52 and 54.
• Mother died at age 68 of brain cancer. Also history of dialysis and triple by-pass 6 years prior to her death.
Company A:
• Uses Criteria Underwriting
• History of Mother throws client out of absolute best class.
• Carrier has elite, preferred and standard rates.
• Client offered Preferred.
Company B:
• Uses Debit/Credit Underwriting
• History of Mother creates loss of points which is more than offset by positive points due to excellent health of applicant and remaining family history.
• Carrier offers 3 preferred and 3 regular non-smoking rates. \
• Client offered class 1, best offer.
In this study, an extremely healthy client with no personal health problems and a reasonably good family history gets two different offers. Company B employs the debit/credit approach and finds that the client has so many points to the good (excellent blood pressure, fitness, cholesterol, height/weight etc.) that they outweigh the serious family history negative of the mother's early death due to cancer. Company A however, does not have the flexibility in their underwriting criteria to ignore the fact that there is poor family history on the mother's side. The simple fact that this history happened precludes their best offer. Hence, a better rate with Company B.

While criteria underwriting is by far the most prevalent in the Canadian market, one recent entrant to the preferred game does offer the debit/approach Unity Life. Unity uses the AUS (Automated Underwriting System). AUS assigns points for each factor in the underwriting process. As such, clients can benefit from excellent results in one category offsetting poor ones in another. This is also why you'll not find a criteria chart when selling a Unity product. AUS tallies the score and delivers the offer.

The results speak for themselves. Unity is currently approving 74.4% of all applicants in classes A, B and C. This breaks down as follows:
Class A 14.4%
Class B 44.9%
Class C 15.1
 
 
 
 
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