Macquarie Bank plans to double the headcount of its life insurance unit this year as it rolls out a web-based application process tool to financial advisers designed to win business off paper-based rivals.

At the heart of the platform in an “underwriting rules engine” which quickly computes an applicant’s claims risk based on answers to questions about medical condition, occupation and pastimes.

The engine recognises 900 medical conditions, 2000 occupations and several hundred pastimes and pursuits.  “Generally, we don’t like miners who work with explosives,” said Marcus Chantry, Macquarie’s senior product manager for insurance.

The engine typically does not make an assessment on a single response but rather a commination of responses.  For instance, responses to questions about an applicant’s height and weight and other medical history may result in a loading being placed on the quoted premium or an exclusion.

Depending on responses, additional and more traditional assessment techniques may be required, such as a contact with the applicant’s general practitioner.  “It’s flexible enough to consider all the information as a whole rather than make decisions on individual bits of information,” Mr Chantry said.

A pilot of the program launched last October and involving 24 advisers had yielded positive results, he said.  The technology allowed advisers to assess applications on the spot, with an average processing time of 15 minutes.  Macquarie Bank head of adviser services Neil Roderick said it could take nine weeks for a traditional paper-based life insurance application to be processed by competitors.  “It’s a pain the neck basically.  We want to bring revolutionary change to that.”

Macquarie will target its existing 6000 strong adviser network with a national roadshow starting next month.

Macquarie Bank has had a life insurance licence for 12 years but last July ramped up its interest in the sector.  The product is underwritten by Macquarie and reinsurance is supplied by Munich Re, which has worked with a similar program in the United Kingdom.

Macquarie’s life insurance unit employs 12 but this is likely to rise to 25 by the end of the year.

(Australian Financial Review - Wednesday January 25, 2006)