A team at the Society of Actuaries has posted a major report on how new life insurance policies really are made.
Members of the Improving the New Business Process Survey Subcommittee, part of the SOA’s Committee on Insurance Mortality & Underwriting Surveys, persuaded 19 U.S. life insurers and five Canadian life insurers to tell the subcommittee how they bring in new business.
The participating insurers include carriers of all types and sizes, ranging from Erie Family Life to Unum Group’s Colonial Life & Accident unit.
The participating insurers answered questions about their applications, underwriting requirements, underwriting resources and policy delivery processes.
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A copy of the full survey report is available here.
The results do not necessarily give a complete picture of what’s really happening in U.S. and Canadian new business processing. The list of major carriers missing includes Brighthouse, MassMutual, New York Life, Northwestern Mutual, Prudential Financial.
But the results may give readers the start of an idea about how new business processing is working.
For a look at seven highlights, read on.
1. How long insurers take to approve cases varies widely.
Six of the 22 insurers who answered a question about turnaround times said the process fewer than 70% of applications within 30 days.
Eleven said they process more than 80% of applications within 30 days.
2. The top underwriting acceleration strategy is low-tech.
Twenty-three carriers listed and ranked the changes they made that had the most impact on speeding up underwriting. The survey managers ended up with a total of 60 underwriting acceleration changes.
The most popular underwriting acceleration change was adjusting age and amount requirements. That strategy came up 12 times.
Adjusting the underwriting rules engine ranked second; that strategy came up nine times.
3. The limits on use of automatic policy approval systems vary widely from insurer to insurer.
The SOA team found, for example, that 14 insurers reported the maximum face amount their systems could approve automatically for a 35-year-old.