Underwriting

A half century ago, physicist and philosopher Thomas Kuhn first coined the phrase “paradigm shift” to describe a fundamental change in assumptions. The term has since been over-applied to everything  from economics to politics – even becoming the title of an episode of Star Trek! Yet while so often misused,  I believe the term paradigm shift perfectly describes what is happening in underwriting today.

Wearables introduce a multitude of ways to monitor health. The quality and quantity of information supplied by wearables will transform how we manage our lives. There is a huge opportunity for life insurance companies to change the way we interact with our customers and to improve how we manage risk.

Life underwriting has a long history. It also has a history of successfully reinventing itself.

Many life insurance carriers have implemented some type of accelerated underwriting program for life insurance. As promising as some of these programs are, however, there is still a balance between efficiency and risk management that needs to be maintained to facilitate continued growth.

The underwriting of mental health conditions has always been notoriously difficult. To properly assess such applicants an underwriter needs to look at the complete picture of not only the applicant’s health but also factors such as employment record and support network.

New global research released by Vitality, a leading behavior change platform, reveals that financial incentives combined with wearables encourage people to significantly increase their physical activity.

While grief and sadness may be normal physiologic responses to stressful situations, depression is not.  Whether that depression translates into conditions that affect insurability or threaten a person’s well-being is always a difficult assessment for underwriter and clinician.

Could 2019 be the year of an underwriting technology transformation? We’re not yet ready to make that prediction, but we do see the makings of a transformation, as more insurers invest in technologies that they believe will deliver solid returns to their top and bottom lines. In fact, underwriting is the second-largest category within the growing life insurtech investment sector.

Can machines learn? RGA Senior Data Scientist Dr. Dihui Lai thinks so, and he should know. Lai recently unveiled an RGA-developed “AI-Augmented” underwriting system at the Society of Actuaries Predictive Analytics Symposium and took a few moments to explain the results.