What You Need to Know
- Life insurance have been trying to simplify and speed up life underwriting.
- COVID-19 has put new underwriting strategies through a brutal test.
- One challenge has been gaps and lack of structure in alternative data sources.
The COVID-19 pandemic introduced new challenges and opportunities for life insurers.
Deaths from SARS-CoV-2 not only pressured benefit costs, but also increased consumer demand for life insurance products.
Meanwhile, conducting medical exams and blood tests — the mainstays for procuring underwriting information — became nearly impossible due to public policy decisions made in an effort to quell the spread of the novel coronavirus.
Life insurers needed to pivot — and fast.
Thanks to accelerated or “fluidless” underwriting, the industry learned it was more agile than previously realized.
Moving quickly and carefully, life insurers reconsidered previously underused data sources and already-established processes and systems to meet customer demand, discover new products, and ensure solvency in a sea of present and future unknowns.
Here are some lessons life insurers have learned.
1: Digital health data is useful for accelerated underwriting.
Digital health data can potentially be used in lieu of traditional labs and paramedical exams.
Incorporating alternative evidence from sources such as electronic health records (EHR), clinical labs, and medical claims data can help improve consumer experience and accelerate the underwriting process.
However, the data has limitations. Digital health records generally do not provide the same level of protective value as traditional labs.
In addition, they often lack uniformity and structure.
To bolster automation, this hurdle must be overcome.