A computer software flowchart (Image: Thinkstock)

E-underwriting has transformed the life insurance new business underwriting process — and the technology continues to evolve and adapt.

Yet, far too many carriers make the fatal mistake of misjudging modern e-underwriting capabilities. Automated underwriting is often considered just another form of back-end software, rather than a key means to improve the customer experience.

(Related: Life Insurers Can Use Social Media Data in Underwriting. Should They?)

It’s time to make sure we effectively deliver on what our slick new user interfaces are promising consumers.

Insurers are seeking to echo the elegant, accessible web and application design commercialized by firms such as Apple to help attract and guide customers through the life insurance application and buying process.

Perhaps like no other modern entrepreneur, Apple CEO Steve Jobs was obsessed with beauty, and Apple’s engineers came to expect a brutal rejection of “good enough” — Apple’s products had to be “insanely great.”

Less discussed is the uncomfortable fact that function mattered to Jobs as much as form. Designers on projects from the iPhone to the Mac were often sent back to the drawing board when the resulting product did not perform as promised.

What our industry is realizing is that how you sell is just as important as what you sell.

Under the UI/UX

Many carriers seem to be applying only part of this lesson, concerned primarily with the niceties of digital design, from user interface (UI) to user experience (UX).

Too many fail to extend available e-underwriting technological capabilities to enhance the underwriting decision process. New business (application) and underwriting processes are intricately intertwined, after all. To ignore one at the expense of the other risks failure of the whole. Only consider where the real exposure lies for an insurer: not in the digital front end of the process, but during the underwriting, or risk analysis, phase.

Alarmingly, insurers seem to be chasing appearances, investing eye-watering sums of money in UI/UX projects to improve the application process, from streamlined websites to gamification and mobile applications.

But beauty is often only skin deep. These sleek, web-based applications can mask a distressing reality: Underwriting technology underpinning the decision process is not attracting the same attention. An RGA global claims technology survey of 107 large insurers from around the world revealed that only 40% of companies have integrated or upgraded automated underwriting processes to support gleaming new apps and interfaces.

The result is predictable. An attractive design cannot disguise inadequate underwriting processes.

In the same RGA claims technology survey, many carriers shared concerns that their underwriting processes were inefficient. Too many insurers are having to decline risks simply because they do not have enough analysis to accept.

Carriers must ask themselves: Are we using all available technology and evidence sources to confidently qualify as many risks as we should?

As Jobs would say, “We don’t get a chance to do that many things, so everything should be really excellent.”

The Solution

Making data-driven decisions that combine various evidence sources into decisioning and an overall analysis is one way to make that happen. Life insurers can now access a growing wealth of applicant data — from credit behavior and driving records to prescription histories. Combined with traditional medical information, these non-traditional data sources can create a more complete picture of the applicant’s long-term mortality risk.

Yet business processes are only as good as their weakest link.

Insurers need flexible, “software as service” systems that combine multivariate and non-traditional, data-driven evidence to speed risk analysis, help the carrier avoid invasive and time-consuming medical tests and fluid draws, and still deliver individualized underwriting decisions.

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Bruce Bosco (Photo: RGA)

Bruce Bosco is vice president, business development, at AURA Technologies, an affiliate of Reinsurance Group of America Inc.