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Conning Report: Underwriting Could Be Simpler

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NU Online News Service, Sept. 24, 6:15 p.m. – U.S. life insurers may need to come up with quicker, simpler underwriting strategies to appeal to young life insurance buyers.

That’s the conclusion of a new report on underwriting from Conning Research & Consulting Inc., Hartford, which is now a unit of Swiss Reinsurance Company, Zurich.

Jack Gohsler, a senior vice president at Conning, and other analysts at Conning acknowledge in the report that the wealthiest prospects are still willing to spend time undergoing exams and waiting for life insurers to process the results.

But many baby boomers are looking mainly for retirement savings vehicles, and many younger prospects seem to feel they have no need for life insurance protection at all, the analysts observe.

The analysts cite figures from LIMRA International, Windsor, Conn., showing that the number of underwritten life insurance policies sold in the United States has fallen to about 10 million per year, down from 15 million per year in the mid-1980s.

Roughly 80% of the prospects who are still in the market for death benefits are lower-income and middle-income consumers “who are transactional purchasers,” the analysts write. “These are individuals seeking an easy-to-understand, hassle-free, do-it-yourself approach to the acquisition of life insurance and other financial products and services.”

The “transactional purchasers” buy an average of less than $250,000 in coverage, and the “high-net-worth, advice-and-counsel” purchasers buy an average of more than $750,000 in coverage. But developing systems to please the transactional purchasers could also improve the quality of the service given to the high-end purchasers, the analysts write.

The Conning analysts give the Web-based underwriting service developed by Corp., a unit of the MIB Group Inc., Westwood, Mass., as an example of the kind of technology that could help all applicants.

Life underwriters can use the e-Nable system to look up credit reports, motor vehicle reports and MIB’s own detailed individual health records.

“The ultimate technology objective is for life insurers to be able to issue well-underwritten policies on a point-of-sale basis, either through direct customer contact or agents’ laptops linked to various databases,” the Conning analysts write.