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Gen Re is pleased to share this summary of key highlights from our 2022 Individual Life Accelerated Underwriting Survey. Thank you to our Steering Committee members who collaborated with Gen Re to review the study framework throughout 2021 and 2022.
Fifty-five Individual Life insurance carriers participated in the 2022 study, though they may have been at varying stages of implementation with their Accelerated Underwriting workflow.
For our survey, the definition of Accelerated Underwriting refers to any underwriting workflow that aims to decrease time from application to issue for applicants who meet criteria that qualify them to bypass a paramedical exam and/or fluid collection.
Programs may include some combination of the following:
Data provided in this study is for AU workflows used with Individual Life insurance products only.
The majority of participating companies (77%) have either a fully implemented or partially implemented AU workflow. Sixteen percent do not currently utilize an AU workflow, but plan to implement one in the next two years. Four companies reported that they do not currently have, nor do they plan to implement an AU workflow at this time.
For those companies with fully implemented workflows, length of time a workflow has been in place ranged from less than one year up to nine years. Companies with partially implemented workflows have typically had pilot programs in place for less than two years.
Over half (52%) of companies utilized external resources to develop their AU workflow.
Companies that do not currently utilize an AU workflow noted technology, budget constraints, resources, low application volume, and other competing priorities as reasons they are unable to implement a program at this time.
Nearly three quarters (72%) of companies cite reducing time to issue as one of the top three goals when implementing their AU workflow. Meeting consumer and agent expectations also rank high among initial goals. None of the companies noted reducing underwriter error as a top goal.
For many companies, an AU path is mandatory for agents and clients if the application meets eligibility requirements. Some companies allow the agent and/or client to choose an AU path, although most systems automatically opt-in an application, and require the agent to manually opt-out if they wish to do so.
On average, companies that have an AU workflow see an improvement of 20 business days from application submission to final decision compared to full underwriting workflows.
Companies typically offer three non-tobacco and two tobacco standard or better underwriting rate classes through their AU workflow. The number of non-tobacco rate classes ranged from a low of one to a high of six. For tobacco rate classes, the number ranged from a low of zero to a high of four.
The majority of companies communicate back to clients regarding underwriting decisions made through their AU workflow. About one-third of companies reported providing a specific reason to clients regarding the underwriting decision made through their AU workflow. The remaining provide a broad reason or no reason at all. Eighty-six percent of companies reported there is no difference in communication back to clients for fully underwritten applications versus accelerated underwriting applications.
Carriers were asked how often they use various sources of underwriting evidence. The most used tools in AU workflows are: MIB reports (incld. codes/EHR, IAI), motor vehicle reports (MVRs), prescription (Rx) database rules/models, and electronic applications. The top tools which are not currently used, but most often considered include behavioral science data, data extraction tools (e.g., NL, NLP, AI), electronic health records, and medical claims data.
About two-thirds of companies (65%) use rescission activity as a control measure throughout their AU workflow. Other common controls in place include random holdouts (53%), post-issue APS (49%), post-issue auditing (44%), and post-issue agent monitoring (42%).
Close to half (47%) of companies estimate mortality slippage associated with their AU program through random holdouts. Thirty-two percent are monitoring early claims experience, 29% utilize post issue APS, and 11% utilize retrospective studies. Eighteen percent are not estimating at this time.
The frequency with which companies review their AU workflow rules varies. One quarter of participating companies review their rules on a quarterly basis, while another 25% review on an annual basis. The remaining companies review their rules monthly, bi-annually or as needed.
The most prevalent planned changes to AU workflows in the next two years include the addition of data sources, modifications to face amounts, and modifications to algorithms.
When asked about changes already made to their AU workflow, the most commonly reported changes included utilizing new data sources (29%), expanding eligibility (24%), and increasing face amounts (24%). Companies also reported changes to their process, automation, and product offerings.
The top three greatest challenges companies face with AU are tracking mortality, outdated legacy systems, and managing expectations. Other challenges include: low throughput percentages, lack of AU data, and rules tuning. A small percentage of companies also listed non-disclosure on applications and internal risk tolerances.
