The December 2015 unveiling by Prudential Financial and Aequalis of 10- and 15-year term policies for people living with HIV is big news for an estimated 1.2 million who carry the virus. Notable among them are individuals in the LGBT community who have long been unable buy life insurance, despite the availability of drugs that enable them to live healthy lives, free of AIDs-related symptoms.
The product rollout is also significant for this reason: It’s indicative of a multidisciplinary revolution underway that bridges advances in information technology, medical science and underwriting. These gains potentially herald a wave of new products for people that previously were uninsurable.
Bill Moore, a top executive at Munich American Reassurance Co., spoke of this bright future during an in-person interview with me in January. The availability of life insurance for people living with other formerly life-threatening conditions — from heart disease to diabetes — could significantly boost the prospect base for life insurers. Technical advances, said Moore, could also lead to more competitive products.
“More than ever before, our focus is on how to insure more people without negatively impacting the risk profile of our book of business,” says Moore. “The huge amount of data available today, coupled with advances in medicine and the experts who can bring it all together…we’ve never seen this before.”
Moore should know. As Munich Re’s chief underwriter, he’s overseeing research efforts that hold promise for people with a range of conditions that were once uninsurable or represented an adverse risk due to an abnormality. Case in-point: Munich’s Re’s studies on liver disease.
In years past, he noted, Munich Re would charge policy applicants a higher premium if their lab-tested levels of certain liver enzymes departed from the norm by a certain degree. Recent studies have enabled the company to interpret data with a more discerning eye.
Thus, the reinsurer now looks for patterns of abnormalities that can be attributed to specific underlying diseases or conditions, then makes a mortality assessment based on the condition. For example, benign fatty liver (steatosis) is the most common cause of elevated levels of transaminases, enzymes that may be an indicator of liver damage. But benign steatosis carries no increased mortality risk.
Munich Re also benefited from research gains in studies on breast cancer. That led to a revising of the company’s life insurance underwriting manual, Edge, which boasts a new calculator for rating women with a history of breast cancer.
Developed using data from SEER (Surveillance, Epidemiology and End Result), the national cancer registry of the National Institutes of Health in the U.S, plus clinical studies and industry data, the calculator divides policy applicants into three age groups: 49 and under, 50 to 69, and 70-plus. These groups contrast with the single age band (40 to 65) that Munich Re used in prior years.
The result of the switch is a decrease in the policy ratings recommended for women between the ages of 50 to 69, the vast majority of early-stage breast cancer applicants. Primary or direct carriers with which Munich Re has reinsurance agreements (Prudential Financial, among others), can now offer applicants more competitive premiums. And they can finalize policies sooner.
These and other research gains were possible in part due to the wealth of policy and claims data that Munich Re — one of the world’s largest reinsurers with a market cap of nearly $30 billion — has at its command. But in the case of Prudential’s term policies for the HIV community, Munich Re also benefited from the unique expertise and resources that Aequalis bought to the reinsurer.
The components of that know-how — Aequalis detailed analysis of international policyholders living with HIV, its methodology for ascertaining the feasibility of offering life insurance to the U.S. HIV community, and a compliant-friendly process for interfacing with HIV-positive applicants — all helped to considerably speed product time to market.
The unusual collaboration could presage the debut of other market “disrupters:” start-up companies that can bring efficiencies, knowledge and skills to an industry badly in need of innovation. And it’s precisely such innovation — not the volatility of the capital markets or interest rates — that life insurers must depend on if they’re to achieve sustained, long-term growth.