Underwriting

There is plenty of evidence that, generally, mortality is elevated in mental illness. That it should be so in the more severe forms such as schizophrenia and bipolar disorder should be no surprise, but it is interesting to note that even milder conditions may present an extra risk.

The marriage between technology and faster underwriting is a union the life insurance industry has encouraged for many years. Progress has been slow, but MIB Group is making headway, recently signing an agreement with Epic to utilize its electronic health records system.

This final article explores the future of accelerated underwriting in the context of a broader consideration of the future of risk selection in general. It follows some of today’s prominent trends – personalized products, underwriting engagement, and heightened risks and regulations – to their potential long-term outcomes, and concludes with basic steps insurers can take today to help lead the industry of tomorrow.

The digitization of the life and health insurance business is happening at breathtaking speed. With that, the policy application and underwriting processes are being brought to the attention of people who used to be less concerned with them - such as actuaries, marketing folks and product managers.

Technological advances in biosensors and increasing amounts of heart rate data from wearable devices and electronic health records are leading to the development of more sophisticated underwriting algorithms. This data, when coupled with robust epidemiological evidence about the prognostic value of heart rate, may improve insurer understanding of cardiovascular risk and ultimately allow underwriters to better predict morbidity and mortality risk.

With advancing technology and evolving underwriting tools, it may be easy to overlook what has now become an “old standard”, the World Wide Web. 

The call often comes in like this one: “My client does something called vaping.  It’s not like smoking cigarettes—it’s much less toxic.   He doesn’t do it that often.  He can get a non-tobacco policy, right?”  So, what is vaping?   How toxic is it if at all?  And can you get a non-tobacco policy?

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.