Joe Russo

For years, this column has been a devotion and a sincere reflection of the passion for disability insurance held by the great W. Harold Petersen.  I know Harold has deeply enjoyed his tenure, sharing his unfathomable knowledge and remarkable insights to the relatively misunderstood and often overlooked world of disability income protection.  A true pioneer of the industry, he has relentlessly continued for many decades to promote DI in all its wonderful facets and teach new producers and their clients about the altruistic attributes of the market and the distinct importance of insuring one’s greatest asset, his or her ability to earn an income.

At the seasoned age of 89 years old, Harold Petersen has made the difficult decision to pass-on the writing of this column in order to spend more time with his darling wife Jacquie and their many children, grandchildren and great grandchildren.  He remains Chairman of the Board of Petersen International Underwriters, but intends to spend some time away from the office pursuing other personal interests.

Harold is very appreciative of Stephen Howard and of Broker World magazine, and he knows the column will be in good hands going forward as very qualified and competent authors will provide expert insight in the months to come.

As we move on to a new chapter, it would be a grave mistake to lament and dwell on the past and not look forward to the future of this business.  Harold Petersen has been a mentor of mine for many years, and he taught me to embrace history and learn from the missteps and successes of yesterday, but always be looking forward.  Always be scheming, thinking and creating that next evolution in the DI business.  Progress only occurs when you take a chance.

As we are all aware, technology plays a big hand in all aspects of modern life in this country and that is especially true of the financial world.  In most insurance markets, we are seeing big business running globally with digital resources and continuously-improving automation.  Many insurance lines are now capable of transacting business instantly with program platforms that quote, process applications, underwrite, accept payment and issue and deliver comprehensive insurance policies immediately by electronic means.  Systems are becoming smarter and more user friendly by the day.

These industry advances are also taking hold in marketing and sales divisions, which in turn is allowing insurance companies to directly target clients of any demographic without the finesse and expertise of licensed insurance professionals.  Fortunately for most of us, the DI market is somewhat of a different animal than its life and health cousins.

A spot-on adage that Harold Petersen reminded me of frequently in my early days in the business is that disability insurance doesn’t sell itself.  Brokers and agents are the true heroes of the industry and are instrumental in its success.  For it takes a seasoned advisor to, first, sell a prospective client on the fact that they are not impervious to illness or injury and, second, easily relate the sometimes complicated nuances of the proper DI policy.  Some tech-savvy carriers and brokerage outfits have created online DI sales platforms for coverage with significant benefit and term limitations, but ultimately, the results have been mediocre at best.  Only time will tell if a robust income protection product can flourish and be triumphantly marketed and sold without the guidance of a live insurance professional.  In the meantime, the DI market’s best friend is still the learned and patient insurance agent.

As a result of advances in automation and claims administration, DI carriers are showing more proven success in marketing disability programs to the middle markets as well as lower income clientele.  More Americans are being offered income protection than ever before, and, as market competition drives premiums lower, the industry has greatly benefited from a huge influx of new premium dollars.  But there continues to be immense growth in the upper markets as well.  

Where we are witnessing substantial growth and the most excitement in the market as of late is in the rapidly expanding “multi-life” simplified-issue business.  Both domestic and specialty-market international carriers have embraced DI programs that employ simplified or even guaranteed-issue underwriting on groups with as few as three insured professionals.  This type of insurance platform is quite alluring to prospects as there are usually no requirements of lengthy paper applications nor intrusive paramedical exams and lab tests.  Furthermore, agents are finding it easier to get a foot in the doors of prospective corporate clientele because a program like this carries substantial group discounts that bode well for HR managers and company budget bottom lines.  

These simplified-issue programs have blurred traditional market-sector boundaries and are being successfully sold by individual DI producers as well as the expected group DI producers and employee benefits producers.  And that is the genius behind it all.  These policies have found attraction along many lines and provide market-entry points to multiple financial specialist categories.  No longer are individual DI producers left out of the multi-life action.  I have seen an agent turn a single attorney DI sale into a multi-million-dollar guaranteed-issue sale on the attorney’s entire law firm; it’s not a rare occurrence either.  The multi-life market is red hot, and it is the present and foreseeable future of this industry. 

Whether it be new technology, simplified sales platforms or new insurance products, the current state of the income protection market is vigorous and progressive.  The unknown of the disability industry is nothing to fear, so let’s continue on to the next chapter.

When considering personal insurance lines, “more” is almost always better.  More coverage means more financial protection against the bodily threats and risks that inevitably come with life.  When you prescribe your clients medical insurance, you dutifully advise them to have a comprehensive policy that fits into their budget but covers them as completely as possible.  When you prescribe your clients life insurance you take the same stance, finding them as much appropriate coverage as they can afford to allow for financial protection of the family as well as estate planning.  But when it comes to disability income insurance, mistakenly, the same approach isn’t always followed.

Many millions of Americans work for a living, earning a regular paycheck that provides for the necessities of life (food, shelter, clothing, transportation, insurance premiums, education, etc.) for themselves and their families, but most lack sufficient income protection.  It’s inherently natural to disbelieve in one’s own morbidity and physical demise, yet statistics show that a healthy person is at least three times more susceptible to disablement from accident or sickness than to death during their career. Disability insurance is quite often overlooked or simply an afterthought—and that needs to change in this country.

Much of the U.S. workforce that is covered by some form of disability insurance is under the impression that employer-sponsored benefits are sufficient to their insurance needs and individual income protection plans aren’t necessary.  For many Americans, of modest levels of income, that is true.  A group long term DI program provides minimal, but enough insurance protection to most industries and occupations.  But what about those that make more money than the average American? 

Consider an executive making $300,000 per year.  Is a group LTD plan, providing 60 percent of income up to $10,000 per month, going to allow enough protection to maintain that person’s lifestyle or the lifestyles of their spouse and children?  Families with a high net worth require more insurance than most, as their average expense ratio is significantly higher than an average household.

It is clearly an agent best practice to prescribe a prospective client with as much disability insurance as they can get their hands on.  In addition to group coverage, domestic carriers offer small layers of individual insurance.  But for anyone in this country making over $250,000 annually, supplemental or excess high-limit DI is a must to bring income protection levels up to more appropriate ranges from 65 to 75 percent of income.  Those are the magic numbers.

The U.S. Department of Labor and DI experts throughout the country have maintained for decades that a working American should have at least 65 percent of his/her income insured in the hopes of providing for one’s family during a period of total disablement.  Some high-limit DI carriers, in certain cases, are now participating with coverage up to 75 percent of one’s income, if any in-force benefits happen to be taxable, to better allow for more substantial income protection.

Make it an integral part of your repertoire to teach your clients that, in addition to life and health insurances, disability income protection is a necessity and having less than 65 percent of their income insured just isn’t going to cut it.  Insurance is all about preparation for the unknown and planning for the worst case scenario.  A vast majority of Americans, even the wealthy, fail to maintain significant savings and liquid assets in cases of emergencies like unforeseen disablement.  Retirement programs are certainly gaining in popularity and more people in this country are planning for their futures after retirement, but they are severely lacking in protection for the here and now during their working careers.

And after you have convinced them of the fundamental importance of disability insurance, you must make those additional efforts to show them that some DI just isn’t enough DI.  Underinsurance provides a false sense of security for which you don’t want to be responsible.  As an advisor you owe it to your clientele to get them appropriately insured to high-limit DI levels so they can economically care for themselves and their families if they were to suffer a short or long term impairment.  You are not selling them just another redundant piece of paper.  You are providing them with financial freedom from potential disaster.

But after you have exhausted group LTD and domestic individual insurance sources, where else can you turn if your clients can’t acquire coverage traditionally either due to a health or occupation concern or due to a benefit participation limit issue?  U.S. carriers won’t allow for the participation limits that your high net worth clients need, but the Surplus Lines market including companies like Lloyd’s of London will.  The “secondary” or specialty markets hold the unique ability to be more flexible and accommodating to clients with more to risk than most.

These markets have been participants in U.S.-based risk for almost forty years, and their products and offerings have thoughtfully evolved into the best accompaniment to American disability coverage.  Long term “own-occupation” benefits with generous payment schedules including monthly and lump sum payouts are available to clients needing more than what U.S. carriers are willing to offer.

The right tools are at your disposal.  Use them.  Revisit clients you have assisted in the past.  Be relentless.  Pound it into their brains that disability insurance indemnifies their greatest asset—their income.  Without their ability to work and earn a fair living their lives will be irrevocably changed, and income protection insurance is the safeguard.  Further, stress that being underinsured is risky and more dangerous than anticipated.  It is in your clients’ best interests and your due diligence to prescribe income protection of at least 65 percent of one’s adjusted gross income.  With sincerity and guidance, your clients and their families will be properly protected from the financial roadblocks life sends their way. 

The personal lines, corporate and employee benefits insurance industries are chock-full of products and programs with which many of you are very familiar and probably make your living selling on a daily basis.  Most non-property and non-casualty insurances fall under the usual categories of life, health, annuities, disability, travel and long term care.  And most brokers and agents will tend to gravitate toward one or two of those specialties, but may dabble from time to time in the others.  Among those main risk divisions, one can find many niche sub-groupings of insurance products that are extremely useful to the consumer and can be very profitable to the producer when one knows how and why to properly market and prescribe them.

Although commonly considered inferior as outliers to rank-and-file brokers, those with “bigger picture” vision easily recognize that niche products serve a masterful purpose in the greater market.  Most were designed to complement or fill coverage gaps in more mainstream product lines.  They are used to supplement or even replace what can’t be found or acquired through the “traditional” insurance marketplaces, and they answer a serious need in this country.  

It is true that niche products should rarely be a primary consideration for the basic coverage needs of your clientele, as the policies tend to be less robust in term length and hold more renewability limitations than standard insurances.  But, when an obvious solution isn’t readily available or when additional coverage is needed but not allowed or at least heavily limited by your usual carriers, niche product lines can ultimately serve your clients very well and succinctly fill in the glaringly dangerous holes in their life and health benefits.

The products in question are seldom found through “usual” insurance channels.  Most are administered through the surplus lines market in the U.S. from European carriers and large, established international insurance organizations like Lloyd’s of London.  In the life/health industry, niche products began their slow and steady introduction into American circles almost a half-century ago, but the need for higher insurance limits in the physician and surgeon disability market of the 1980’s coaxed an onslaught of niche product development and refinement that has continued over the last 30 years.  Interestingly and probably expected, the most recent of product surges have been an immediate result of the implementation of the Obama administration’s healthcare reform and the changes in regulation interpretation that has taken place over the last several years. 

So the questions arise: Why make the effort in your business to market niche product lines?  Why do your clients need these insurances that your domestic carriers don’t provide?  The simple answer is that your clients are human beings, and nature and desire have made them fallible.  Not everyone fits the pretentious mold set out by standard carrier underwriting and actuarial departments.  I can bet that, at one time or another, you have come across a prospect that is too fat, too old, has too many health issues, makes too much money, makes too little money, works overseas, skydives too frequently or did cocaine the weekend before an insurance exam.  I expect that you can identify with having to deal with some of those underwriting issues among your clientele, and I see those issues day in and day out.  Millions of Americans, your prospects, face these common insurance roadblocks, and prejudicial companies keep them from purchasing the financial protection they need.  And for that reason, the specialty, niche product markets exist and flourish to this day. 

Your first step as an interested and dutiful insurance broker is to identify potential prospects for niche products.  That part is easy.  Any client that you have gotten quotes for or taken through underwriting that has been declined by an insurance company for basic or supplemental personal or corporate insurance of any kind is a ripe and ready candidate for a niche product.  Those who are underinsured in life or disability coverage as well as those who have missed ACA major medical or Medicare enrollment windows are all perfect prospects.  In the specialty markets, you will be able to find niche products for most lines including life, medical and disability cases.

So now you are finding solutions for cases you thought were “dead in the water” so to speak.  The niche market will make you a hero and won’t send you back to your clients empty handed, even if your clients work on oil rigs, have severe depression, play professional basketball or have multiple sclerosis.  The niche product market is the “yes man” in a room full of suspicious naysayers.  It’s a very exciting aspect of the insurance industry, and can make you a fortune while helping your clients.

No matter how hard you work, no matter how many hours you put into a case, a declination of coverage doesn’t pay a commission.  Niche products do provide commissions that, although modest on the front end, tend to be significant over a period of renewals, outperforming traditional group benefit commission schedules.  You can also double-up on compensation when prescribing supplemental policies on top of fully-underwritten baseline coverage–two commissions while piggybacking the underwriting requirements of two carriers, simplifying the policy issuance and lessening your work.  It’s a win-win situation.

Now let’s talk specifics.  Excess or high-limit disability insurance is a prime example of what the niche markets have to offer.  If you have a client making in excess of $300,000 annually, you know that you will be hard-pressed to find a carrier willing to insure at least 65 percent of that client’s income.  The niche market is your answer and will be able to provide a supplemental layer of “own-occupation” high-limit disability coverage on top of existing individual or group long term disability insurance. 

For your clients that have been declined by the disability market for their hazardous occupation, substandard health history, age or their preferences for a dangerous avocation, there are ample sources for impaired risk disability underwriting.  Niche product companies have the unique ability to employ more lenient underwriting guidelines than the standard market, allowing your hard-to-place clients to acquire comprehensive income replacement insurance when your standard carriers say “no.”

Regarding the heavy-handed healthcare overhaul by the Affordable Care Act, the market has been forced to deal with great change which has required quick and substantial adaptation to remain profitable.  Many marquee health insurance carriers have chosen to pull out of individual exchanges in states all over the country, ultimately leaving big cracks that Americans are falling through without the ability to secure coverage for periods of time.  The niche market has answered with short term medical plans that are successfully plugging many of the enrollment holes found in the healthcare field at this time. 

Other health care needs that the ACA doesn’t address like travel insurance have always been a staple of the niche product market.  International travel medical policies provide those working in or visiting other countries with comprehensive major medical care anywhere in the world.  They also provide robust ancillary benefits like trip cancellation reimbursement and emergency evacuation services back to the United States.

Life insurance is also represented in the non-traditional market with products like term life insurance for Americans living outside the U.S.  Also, a newer line of life products that has taken the market by storm is contingent life insurance, more commonly known as Failure to Survive or Contract protection.  This product provides a simplified-issue, quickly underwritten death benefit to indemnify short term business contracts including loans and buy/sell agreements.  And like its niche market disability counterparts, the underwriting guidelines are more forgiving than those of U.S. life carriers. 

Along the life insurance lines, war and terrorism insurance has remained important to Americans since 2001.  Built upon an accidental death and dismemberment chassis, war and terrorism coverage provides high-limit benefits to U.S. residents living, traveling or working anywhere in the world.  The best prospects include government contractors, missionaries, international business persons and tourists.   

The aforementioned insurance products are just a glimpse of the worthwhile and exciting options available to your clients.  You may not see a need for them every day, but I can guarantee you that the traditional U.S. insurance market is not always going to be able to assist every one of your clients every time they need insurance.  The need for niche products is completely evident, and the secret to success in niche product marketing is to be prolific.  Provide solutions to problems your clients didn’t think of previously.  

Look to the outlying markets frequently and not only when you hit one of those roadblocks.  If you have a client wanting personal life insurance, also show them a supplemental AD&D policy with war and terrorism coverage.  If you have an individual disability client, make sure to provide a quote for excess personal coverage as well as key person insurance to help protect his business.

There are so many tools out there and they are all designed to help protect your clients’ families, their businesses and their financial well being.  Don’t approach as a salesperson, approach as an advisor and perhaps even as a friend because you are providing more than a service for compensation, you are providing them with safety.  Niche products have become more established and are regularly addressing the everyday insurance needs of all Americans.  It will behoove you to think outside the box and look beyond the traditional insurance marketplaces.

The leaves and buds of the marijuana plant have been cultivated and used by humans as medicine and as a euphoria-inducing agent since ancient times. Its earliest references date back to China in the early third millennium B.C. where it was used to treat gout and rheumatism. Cannabis later made its way to India and then to North Africa where it was popularized as a recreational drug in lieu of alcohol which was banned by traditional Muslim teachings. By 500 A.D. it had landed in Europe.

Spanish explorers brought marijuana to the New World in 1545, but it wasnt introduced to the English colonies until 1611 in Jamestown where cannabis became a major commercial crop for farmers as a reliable source of fiber. Eventually the marketability of cotton and tobacco spread throughout the southern states and replaced the marijuana harvest in the U.S. Pot use dwindled in this country until the twentieth century.

According to many historians, the post-World War I Jazz Era as well as Prohibition led many Americans to turn to the recreational use of marijuana, creating a burgeoning demand. Meanwhile, government research, political posturing and increased legislation heralded by the Federal Bureau of Narcotics culminated in a nationwide crackdown on pot. Cannabis was tagged the gateway drug to narcotics addiction, and its use became widely illegal.

Ever since Reefer Madness was released in the 1930s, through the counterculture era of the 1960s, to the beginning of this century, the American majority remained at war with weed. Marijuana has historically been persecuted similarly to harder illegal drugs by state and national legislatures and law enforcement, creating moral hazards that are just now being addressed with the changing views on pot cultivation, distribution and use. Even though it remains illegal on a national level, recent legislation among many states in the union has greatly eased the societal stigmas associated with the use of pot and the taxation and revenue generation of the marijuana industry.

Cannabis use for medicinal purposes is now legal in 28 states as well as Washington, D.C. Recreational use of marijuana is now legal in seven states as well as Washington, D.C., and after elections last November, several more states will soon be added to both of those lists. It is also now legal to grow between 3 and 12 cannabis plants at your home, depending on what state you reside in. This is possible by trying weed-seeds.ca and purchasing some seeds. Encompassing multiple generations, America has grown more agreeable in its attitude toward herbal intoxicants in the last 15 years.

That fact has carried over into the insurance industry, specifically the life and health markets. Disability underwriters and life underwriters have become more accustomed to seeing applicants who smoke marijuana or use pot-laced products on a regular basis. In the past, these prospects would have been automatically declined by most life insurance and disability insurance companies. But underwriting methodologies have liberalized to a far greater extent in the past few years, and habitual pot users are generally classified and rated similarly to tobacco users. Preferred life insurance rates for someone that frequently uses marijuana can be four times more expensive than preferred life insurance rates for someone that doesnt partake in pot or tobacco at all. The disability income protection rates of most U.S. carriers reflect a similar pattern, but to a lesser extent.

Many industry leaders have additionally begun analyzing the pot risk on a scale of use. For example, a person who smokes pot less than once per week may receive a lower rating than a person who smokes pot every day. In many instances, those who are occasional users qualify under cheaper non-smoker rates. Insurance companies have also begun classifying risk differently for those that smoke marijuana versus those that ingest edible products that contain cannabis.

As insurance companies and their discerning on-staff medical directors become more accustomed to insuring cannabis users, and as the marijuana industry itself expands, the life and health markets will most likely see further increases in underwriting liberalization as the two industries further feel each other out and learn to profitably coexist.

Although the physiological and psychological effects of long-term use are still widely debated, most Americans who use marijuana can now find sufficient levels of income and asset protection from disability and life carriers in the United States.

Yet, finding appropriate business insurance for the marijuana industry itself remains a substantial challenge for insurance agents and financial advisors. Millions of dollars in capital are being raised all over the country by interested investors looking for big returns on start-up growing and distribution businesses, who are in themselves turning to companies who specialize in seed to sale software to help them maximize their profits, and those investors are wanting to hedge their bets in the fledgling industry with large amounts of life and disability insurances.Other kinds of production, such as Private Labeling CBD Products, are also becoming more and more prominent in the industry, which in turn is opening up many opportunities for many Americans. Unfortunately, the traditional American markets won’t yet entertain corporate insurance for pot businesses or personal insurance for those working in those businesses. They commonly report that the moral risks are still too high for comfort. However, the international marketplaces and the surplus lines carriers seem to be more receptive to those prospects.

Insurance syndicates at Lloyds of London are writing personal disability and accident insurances on those working in or running cannabis companies, including growers, wholesalers, and retailers. Most policies do exclude claims arising from drug abuse/misuse including the taking of marijuana. But those generally-progressive overseas underwriters too have shied away from providing financial protection for the cannabis businesses themselves.

Yet, business insurance solutions do exist for the corporate pot world. There are a few sources in the greater London market that have already adopted a more receptive attitude, and see a fast-approaching legal, regulated and flourishing future for the marijuana industry in America. They are willing to write contingent death benefits for key person, loan indemnification and buy/sell insurances on the lives of the owners and operators of the multi-million dollar distribution companies and grow operations popping-up throughout the U.S. They are also beginning to entertain offering business disability insurances for the marijuana industry.

With regards to the blossoming cannabis industry, the most glaring roadblock to their insurance needs is that the use and cultivation of pot is still illegal, in various forms, among many states and in the eyes of the federal government. But considering ongoing media coverage and the obvious changes in ideals of the voting public, it is apparent that Pandoras Box has been opened and the tide of legalization is steadily sweeping across a country with more permissive views towards pot than ever before.

As the marijuana industry in the United States continues to set its foundations, will domestic insurance carriers and regulators also find a profitable and stabilized future in serving the cannabis market? Only time will tell, but that is where our insurance and financial markets are headed.

The practice of underwriting insurance is a fine mixture of art and science.  To be successful, it takes a lot of common sense, even more experience and a well-rounded team of experts.  Time and practice are the true keys to the profitable underwriting of life, health and disability insurances.  As you can probably imagine, factors such as age, gender, occupation risk, financial viability and adverse health history play significant roles in the underwriting of most insurance.  But other, less obvious factors come into play when working in the specialty-risk side of the life and health marketplace.

Unlike the textbook-like, rigid foundations of “traditional” life/health underwriting, the specialty market is much more flexible and fluid.  Most of the participating carriers are found in the European markets that historically follow property and casualty platforms and are accustomed to shorter terms of insurance and shorter windows of risk than what we traditionally find with U.S. companies.  While the underwriting methods of American insurers closely follow a scale of black and white, the shorter-term policies coming out of carriers like Lloyd’s of London fall more frequently into shades of grey.  Their underwriting methodologies and their ability to more readily adjust rates and coverage terms and conditions allow them to profitably take risks that U.S. companies wouldn’t normally touch—many times successfully finding square pegs that will fit into round holes.

While acknowledging such flexibility, specialty-market underwriting faces a number of curious obstacles and challenges that are specific to the plentiful and diverse product lines available through companies like Lloyd’s. 

Life and accident insurances become very interesting to underwrite when a proposed insured is traveling or living overseas.  Risk analysis becomes even more complicated when the client is a private security guard, journalist, missionary or government contractor stationed in areas like Northern Iraq, Libya and Afghanistan.   Most of the available products include war and terrorism benefits, making the attention to political risk very important.

U.S. State Department warnings and alerts as well as a thorough daily canvassing of world news reports provide the due diligence in the underwriting of international insurances which provide death benefits.  Considering the recent socio-economic and political climates of the world, risk analysis has evolved over the last couple of decades and has become quite sophisticated.  Underwriters not only consider rate-loading per individual countries, but more specifically for certain cities or territories within those countries.

For example, the Bujumbura Province of the nation of Burundi is considered a high risk locale, but from an underwriting standpoint, most of the rest of the country is at a tolerable, low risk level.  The differences in risk levels translate to considerable price fluctuations.  A typical “flat extra” for the nation of Burundi is less than one dollar per thousand of benefit while the loading for that rural province of Bujumbura would require five dollars per thousand of benefit.  Location of risk weighs heavily on the basic underwriting concepts and the eventual prices of international life and accident policies.

Another specialty product that is dictated, perhaps even more infamously, by location of risk is Kidnap and Ransom (K&R) insurance.  The K&R centers of risk exposure happen to mostly overlap with the life/accident side, but have additional epicenters of concern in Mexico, Central America and South America.

Kidnappings for ransom have become a worldwide epidemic of great revenue sourcing for petty criminals and more organized syndicates including terrorist factions and drug cartels.  Thousands of Americans, Australians and Europeans are detained against their will every year throughout the world.  Targeted victims range from traveling executives to tourists to journalists to industrial workers, and the ransom demands vary as equally.  Express kidnappings, common to Brazil, are quick and usually non-violent hijackings that end with an ATM payout of cash.  At the other end of the spectrum are long, violent, drawn-out detentions for political and/or financial gain that can last years and usually end with the death of the victim or with a payout that can reach millions of dollars.  Long-term kidnappings are associated with many countries in Africa and the Middle East, as well as Mexico, Venezuela and the Philippines.

The underwriting of K&R policies focuses on the planned business and personal travel itineraries of clients.  In addition to risk location, underwriters analyze specific travel routes and modes of transport within a hazardous country.  Employed security measures and previous threat history are also important in the calculation of K&R risk.  Persons traveling with a personal or corporate-sponsored private security detail are usually considered at lesser risk than those being guarded by local police, foreign military or those without any protection.

Unlike the travel oriented focus of the K&R market, specialty-risk disability insurance tends to require serious focus on mental and physical health risk.  High-limit disability insurance is a sector of the personal accident market that notably requires the most adept underwriting skills among the entire accident and health insurance industry.  Disability insurance in itself requires superior underwriting talent to gauge a relative unknown—the probability, over a period of time, of an employed person to lose, by accident or sickness, his ability to physically earn an income. 

The sedentary, fast-food lifestyles of Americans have led to more impaired risk disability cases than ever before.  Underwriters are being faced with a daily barrage of medically-challenged prospects.  Type II diabetes, coronary artery disease, morbid obesity, high blood pressure and sleep apnea have become commonplace among those seeking disability insurance and underwriters are having to rely more heavily on their medical directors to find a comfortable balance between benefits and pricing.  The costs of underwriting medically-substandard disability insurance are soaring.

Health history, age and build are of course major role players in every underwriter’s analysis of disability cases.  But occupation and daily work duties are additional significant variables in the specialty-risk arena.  Occupations like professional athlete, commercial diver, airline pilot and coal miner require more attention to work-related risk than would an executive.  

Financial insurability is also of great importance when underwriting disability policies as complications come in many forms.  Insurance is commonly needed for start-up companies without acceptable trails of financial documentation.  Underwriters also see individual disability applications from persons with bankruptcy histories and large amounts of business income versus personal earned income.  

In the world of specialty-risk disability, life and health insurance, underwriters are forced to wear many hats if they are to successfully and profitably indemnify the myriad of risk that is out there. 

In today’s business world, long gone are the days of regionalism and local sourcing as companies of any size across many fields conduct business on a global scale.  Any business can expand to other countries by using translation services in Manchester, adapting to fit into the market in whatever country they grow into, and optimizing digital technology to their advantage. Almost every inch of the map has been filled-in and connected by electronic communication, providing immediate transfer of information and spanning vast distances instantly.  Contemporary technologies and conveniences like email and web-based conferencing have allowed for American-domiciled corporations to transact business anywhere in the world at any time of day.

Highly-educated specialist hires have become commonplace among big, medium and small business, no matter nationality or location of residence.  A successful firm’s reach is no longer limited to four walls in New York or Chicago, but to every nation on earth.  U.S. companies are now multinational, employing numerous staff traveling frequently or even residing outside of the United States.

In response to the rapid development of global economic expansion, the insurance industry has attempted to keep up since the end of the twentieth century.  Although sometimes slow to adapt and modernize, markets contributing to the personal accident and employee benefits sectors have developed successful marketing and underwriting platforms for American firms with international interests.

As traditional domestic life and health carriers tend to lack a substantial appetite for international risk, many solutions for multinational employers lay outside “usual” insurance channels.  The most relevant player in the international benefits market is centuries-old giant Lloyd’s of London, accompanied by other major insurers and reinsurers in the outlying London and European markets.  Several large domestic carriers also partake regularly in the group health arena, but the Lloyd’s market remains the go-to for niche international solutions, attempting to mirror the individual and group benefits of domestic counterparts while simultaneously adapting to the daily-changing political and economic climates of the rest of the world.

Most U.S. employers contractually guarantee benefits regardless of employee occupations, compensations, international travel schedules or overseas residences.  Unbeknownst to many of those employers, life insurance, disability insurance, medical insurance, accident insurance and other ancillary international benefits are difficult, if not impossible, to acquire through the domestic market.  Through international channels, however, group and individual benefits are readily available for American employers with risks based outside the United States.

International life insurance offerings are usually limited to term products for individuals and groups of U.S. citizens and/or employees of U.S.-domiciled companies living and working outside the United States and outside their home countries.  Policies are available on guaranteed-issue, simplified-issue and fully-underwritten chassis, but unlike the U.S. life market, policy wordings often don’t include contestability clauses or any limitations regarding international travel or residence.  The downside is that international policies usually have no convertibility and are limited to 10 year maximum terms with no permanent or variable life options.  But in many regards, U.S. life carriers are far behind foreign life companies who are in the business of providing true global benefits. 

Disability insurance for international risks is also limited to term products, but the benefit schedules can be very flexible with long monthly benefit periods and optional lump sum payouts.  Individually-underwritten policies as well as multi-life guaranteed-issue coverage are commonplace in the international benefits sector.  But unlike domestic insurance, international DI carriers don’t require claimants to return to the U.S. to receive benefits, and underwriting standards are far more lenient than those of domestic insurers.  

International major medical insurance is usually guaranteed-issue and available on a variety of chassis depending on the need and length of the policy required.  From tourist and travel policies to longer-term foreign residence healthcare, international medical insurance offers reimbursement benefits for accident and sickness as well as specialty riders for emergency evacuation, repatriation of remains, war, and terrorism, as well as hazardous sports/activities coverage.  Some carriers emphasize medical benefits while other plans are heavy on travel benefits. 

Accident insurance including accidental death/dismemberment (AD&D) and business travel accident (BTA) has become quite common for those working overseas, especially in war zones and other political hot spots when fully-underwritten life insurance isn’t a plausible short-term solution due to time sensitive underwriting logistics and the severity of risk location.

Other major concerns for those working and living abroad are kidnappings for ransom which have become a huge source of revenue for organized crime syndicates and terror groups in developing and third-world nations.  Policies available in the market provide ransom reimbursement as well the emergency assistance of experienced crisis response teams that employ negotiation specialists who are experts in gaining the safe return of a kidnapped employee.  Workers’ comp programs such as Defense Base Act (DBA) coverage are also popular as the insurance has become requisite of most civilians working overseas on government contracts.  

Requests for most international insurances come from the corporate world including human resource managers requiring benefits for employees working overseas.  But the need for international coverage is also common among small business owners, tourists, U.S. expats, government contractors as well as missionary and foreign-aid organizations.

As international business continues to expand and develop for American companies, the need for basic and essential risk indemnification evolves with the socioeconomic conditions found throughout the world.  The insurances available reflect those hazards and concerns that change on a daily basis.  The realm of international insurance has become as flexible and reactive as the world in which it serves.