Life Insurers' Manuals May Need Updates
Establishing a more rigorous underwriting framework that utilizes digital data to enable lasting and effective change will be critical for success.
A successful update starts with observing the in-market experience of each new data source and new analytical tools to identify programs and features worth pursuing and maintaining.
Determining the digital underwriting evidence that is the most protective, helpful, and best serves the market’s needs can lay the foundation for building targeted risk assessment and pricing guidelines.
Further, insurers should review each impairment to determine cover eligibility and pricing.
Since digital evidence can yield a different view of an applicant than traditional evidence, underwriting rules may require certain adjustments.
For instance, a clinical labs report may provide a history of A1c diabetes test readings, but it may not include a reading taken within the last six months. Insurance lab panels may provide the recent readings but not the older readings. Underwriters might want to get the old readings from the clinical labs report and the new readings from insurance lab panels.
Therefore, to help underwriters using an accelerated process reach a similar conclusion as underwriters using a full underwriting assessment process, an insurer must adjust the underwriting guidelines to help the underwriters get the most benefit from available data sources.
New Data, New Processes
As the availability of new data sources continues to expand, insurers need to be able to accept applicant health and lifestyle data, regardless of its form, and then craft guidelines so automated processes can use the information objectively.
Credit score vendors, for example, often do not provide their information uniformly; the metrics themselves, as well as how they are presented, can differ.
Insurers, therefore, must seek to adjust their own guidelines to accommodate such nonuniformity in order to accurately assess the data provided and move the application through the underwriting process efficiently.
Accurately rating applicants, especially those with impairments, depends on a combination of robust and germane data sources.
Guidelines can dictate the layers of additional data sources to fill potential information gaps to enhance risk assessment.
For instance, since available digital data does not always provide an applicant’s blood pressure reading, an underwriter may need to rely on other sources of information.
Coupling appropriate application questions with relevant data sources, such as a prescription check, can help an underwriter determine whether blood pressure is well-controlled by other means, such as recent changes in medication dosage or type.
The Future
As accelerated underwriting evolves, insurers will benefit by adjusting their underwriting manuals’ traditional full underwriting guidelines to assure appropriate use.
Because accelerated underwriting will continue to grow and expand as new datasets emerge, it is imperative that guidelines continue to evolve as well.
Catie Muccigrosso is vice president and chief underwriter for U.S. mortality markets at Reinsurance Group of America, a life and health reinsurer.
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