COVID-19 and Fast Underwriting Are a Bad Mix: Veteran Underwriter

Hank George, a longtime life insurance underwriter, says life insurers may need slow, careful underwriting to protect themselves against the effects of the COVID-19 pandemic.

George makes that case in a commentary published in Contingencies, a publication put out by the American Academy of Actuaries. The academy is a nonprofit body that seeks to shape and promote the actuarial profession.

Many academy members are working to help life insurers reduce use of blood tests, urine tests, and attending physician statements in the life insurance underwriting process, to increase the number of people who can buy coverage quickly online, through mostly or entirely automated underwriting processes.

The academy has a disclaimer under George’s article stating that “the views in this article are those of the author and do not necessarily represent the official views of the American Academy of Actuaries.”

George, however, contends that “accelerated underwriting” or “simplified underwriting” programs may be a poor fit for the post-COVID-19 era.

One problem is that high unemployment rates may cause or aggravate mood disorders, George writes.

Resources

• A copy of Hank George’s commentary is available here.
• An article about consumer group representatives’ concerns about predictive analytics-based underwriting systems is available here.

Even with a traditional underwriting process. “mood disorders reduce life expectancy by an average of eight years in men and six years in women,” George says. “Underwriting psychiatric illness is more difficult than for most medical conditions.”

George says the COVID-19 lockdown may also lead to a second epidemic: forgone care for life-threatening disorders, such as tumors, and strokes.

Hospitals have reported seeing fewer emergency room visits for symptoms associated with heart attacks and strokes, George says.

The lack of attention given to those symptoms “translates to a formidable reservoir of future applicants who should have had proper diagnostic evaluations for suspicious symptoms of mainly chronic and usually progressive cardiovascular diseases,” George says.

George does not talk in detail about the possibility that COVID-19 could give some people permanent kidney damage, heart disease, lung damage, or other serious chronic conditions. But he cites reports that about 80% of people who have received intensive care for COVID-19 leave with unresolved health problems, and that those people’s risk of suffering from chronic disability may be as high as 50%.

In a traditional underwriting process, attending physician statements may be a good source of information about mood disorders and other chronic health problems, including cancer, but “we are far less included to pursue attending physician statements in 2020 than at any time in the past 50 years,” George says.

Lack of blood tests may make detecting pandemic-related drinking problems more difficult, George says.

George says a lack of adequate underwriting information, and an increase in health risk, could lead to “an unprecedented, self-imposed underwriting apocalypse” over the next five to 10 years.

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