A leading cause of delays in life and health insurance policy issue is often due to time lags in receiving the Attending Physician Statement (APS) also known as Third Party Reports and how that impacts the underwriting process.
This problem statement will address APS delays.
The APS is typically required during the life and health insurance application, if the following apply:
The leading causes of death and disease burden globally are heart disease, cancer, strokes and dementia.
Due to advances in diagnostics, the population is being diagnosed at earlier ages and treated earlier for these diseases. Therefore, the APS could be required more often and at younger ages during the underwriting process. For a sense of scale, currently almost 25% of life insurance requests and close to 50% of critical illness insurance requests require a doctor’s report.
The APS is requested directly from the applicant’s physician. However, this request can be the least of the priorities of a practicing physician as they may not consider this a priority in patient care. The worst case scenario with an APS delay is that an applicant could die during the underwriting process without any life insurance in effect or the applicant may suffer a life altering event without any critical illness insurance in effect. These delays affect every aspect of the insurance buyer’s journey and can cause the applicant to have a negative experience at such an important part of the process.
According to the College of Physicians in Ontario, the timelines policy to complete a Third Party Report is 60 days. It is similar in other Canadian provinces. The physician is not legally obligated to comply any sooner. This problem is also observed in the U.K. where it often takes 4 to 6 weeks for an insurance company to receive a Third Party Report and the delays are comparable in the U.S. When the report is finally completed by the physician, the underwriter must review and consolidate all the health history into a relevant mortality/morbidity risk summary and then conduct a mortality/morbidity risk assessment to apply the correct risk premium classification based on all the information received. There is an opportunity to make the process more efficient, globally.
By the time a consumer receives an insurance policy it could be months down the road.
See below for Third Party Reports obligations from physicians:http://www.cfp.ca/content/53/10/1659.1.short