Time to Put Tax Returns in the Underwriter's Toolkit
July 19, 2012| By Tony Forte | Life | English
“The time has come, the Walrus said, to talk of many things”…sometimes that talk also involves the walk.
Removing roadblocks to sales in an effort to be more profitable is the ultimate goal; perhaps that can be achieved by making the process of buying insurance more user-friendly. And who doesn’t want to work for an insurance company voted as “Easiest To Work With”? But what do we forfeit in our race to capture that crown?
I frequently hear underwriters opting to change their practices to match a competitor. Why the change? Was it because they viewed their current practices as unsound? Or, having investigated the practice, reached a different conclusion? Sadly, it seems to me, many times it is solely to match the competition. Yet, when a competitor goes in the other direction of requiring something new or additive, what is the response? Too often, we convince ourselves that Distribution will not accept the added requirement, or, despite the new requirement making sense, that the new process will likely hurt sales. End of discussion.
One recent example of this rationalization concerns objections to the use of Form 4506-T (Request for Transcript of Tax Return). In an era of increasing transparency, not allowing the underwriter access to financial data is difficult (impossible?) to defend. Anyone applying for a mortgage or car loan provides this type of information,. One recent article suggested a home buyer be prepared to provide multiple W-2’s, pay stubs, tax returns, two to three months’ worth of bank statements and any outstanding liabilities including deferred student loans. By contrast, 4506-T seems much less intrusive. Some argue that clients do not wish to disclose their confidential tax returns, yet is this any more “sensitive” than the personal medical history that is regularly provided?
Working without full disclosure of any nature seems to abet fraud - at our expense. To be clear, this is not to argue for a tax return on every case, rather to support the Underwriter’s access to available assessment tools when they make sense.