I remember my first days as a life insurance underwriter. I learned that during the underwriting process underwriters seek to understand five key risk areas from the customer: health and financial status, occupation, hobbies and travel. With life insurance contracts typically lasting decades and the price often set at the outset, it’s no surprise that the insurer is keen to understand the risk they are accepting.
Although today the potential underwriting outcomes haven’t changed drastically, what has changed significantly is the sophistication of underwriting rule engines, such as Swiss Re’s Magnum. Over the past 20 years, these rule engines have developed to an extent that for the most part instant online acceptance can be assured for the majority of our customers in Europe.
Despite these initial advancements, the benefits of this digitalization and ongoing improvement have always focused on those applicants with perceived lower risk disclosures. By and large customers with more complex existing medical conditions or those who make more detailed disclosures have not benefited much from our industry’s digital advancements. This I find a touch frustrating.
First off, it’s worth stating that traditional – i.e. manual – underwriting has a role to play here. When the applicant is disclosing significant health issues, very often the underwriter will need to work with the applicant, their doctors and other health professionals to understand the person’s risks and achieve the best outcome.
So is this “detailed” manual underwriting a bad thing? No, not at all! Actually, it’s by understanding the details of their medical condition that underwriters can offer more people insurance at a fair price.
More advancements ahead
But I think we could go further. In 2021 we’re in a much better position than ever to turn our focus to how we can offer instant life insurance to a wider group of people, and even more than just those with the most common medical conditions such as high blood pressure.
Over the last decade consumers have a new dawn in the availability of their own medical information. This means people are more aware of their health than ever before. Medical terms about a patients’ diagnosis that were previously used by healthcare professionals are now available to us as individuals. This new level of transparency, designed to put patients in control of their treatment will increase with the further creation of digital health wallets. This means that insurers can interact directly with applicants on complex health matters and thereby reduce the burden on doctor surgeries and ultimately improve underwriting service times.
But these improvements aren’t limited to the future. Until now, one of the most challenging cases to serve digitally is an applicant who has a combination of underwriting risk factors. I’m pleased that digital progress has been made here too – it is now possible for people with conditions such as diabetes to search online, apply for cover and receive immediate acceptance. The digitalisation of Life insurance has much more to offer than simply speeding up the time it takes to serve a limited cohort of applicants – our experience now allows us to open digitalisation to more customers than ever. At iptiQ it’s our mission to make life insurance easier for everyone – come and join us on this journey.