At the 2014 NAILBA 33 conference in Hollywood, Florida, Brad Gabel (AIG Global Consumer Insurance), Bill Moore (Swiss Re), and Kathy Deren (Nationwide) joined forces to create the Risk Appraisal Forum, where they discussed the forecast of the underwriting industry as we enter year 2015.
Each panelist had a unique perspective on the direction the industry is taking and what changes they’ve seen and can predict to see in the near future. Here is a recap of their question and answer session.
How are things evolving in the industry, and can we adapt along with them?
GABEL: There’s a need for speed to get our products on the market — the whole idea of doing more underwriting on the spot. One of the things driving that is the low interest rate environment. A driving change in our industry is also innovation. We’re using the same tools but with minor evolutions.
MOORE: In underwriting, there is an explosion of data analytics. We study behavioral analytics. It’s amazing to see things like applications of authorization where you have to tell the truth. With certain phrasing, the truthfulness goes up exponentially. If you change “Do you smoke?” to “Tell us about your smoking habits,” the response rate indicating tobacco usage is much higher. There are ways to change things. And we’re an industry sometimes where we find something knew and we grab it like a dog to a bone, and I’m here to tell you that I’m not sure if data analytics will be the next big solution.
DEREN: We participated nationwide in a market metric survey. What was the number one request from producers? For carriers to develop more efficient underwriting and new business processes.
Predictive modeling is a hot topic, trying to get cases through quickly and efficiently. Underwriting is both a science and an art. For the art of underwriting, underwriters are looking at the picture holistically. We just have to be careful that we don’t take the art out of predictive modeling.
Also, people are living much longer, and there is a stat out there that 70 percent of all Americans will need some type of long-term care when they’re over age 65.
Most of us are very well-trained on life insurance underwriting, but going into 2015, we have to educate and train on mortality (life insurance) underwriting and morbidity (long-term care) underwriting.
Can you comment on the current relationship between direct writers and reinsurers?