What You Need to Know
- Guidelines will determine when an underwriter can review an application using an accelerated process.
- Keeping the application process as simple as possible as important.
- One challenge: Dealing with the gaps in digital data sources.
Accelerated underwriting used to be the new approach to life insurance underwriting.
Then COVID-19 made it the preferred approach.
For the insurers you work with, speeding up underwriting involves the use of new data sources, technology and processes.
In many cases, it may also lead to updates to the insurers’ underwriting manuals and underwriting guidelines.
Why Accelerate Underwriting?
Accelerated underwriting offers several advantages and conveniences for both life insurers and applicants.
Unlike full underwriting, accelerated underwriting’s alternative data-based process does not require vitals and fluids to be collected by a medical examiner. It also reduces evaluation and testing costs.
How Accelerated Underwriting Works
Accelerated underwriting relies on a fast-growing range of health and lifestyle data from multiple sources that differ from information collected in traditional full underwriting processes.
To work most effectively, the accelerated underwriting process requires support through underwriting manual guidelines that incorporate analysis of the data and assessment of new types of information items into the risk assessment.
Since digital underwriting evidence data can vary in structure depending on the source, guidelines can build an appropriate framework and context for their use.
Guidelines can also support the evaluation of applications based on an insurer’s risk appetite, policy characteristics, and other critical factors that influence rating and pricing.
Finally, they can also simplify deciding whether an applicant qualifies for accelerated underwriting or should be fully underwritten.
Underwriting Guideline Updates
When developing new guidelines, insurers need to consider several elements.
Guidelines should balance risk assessment with customer experience to ensure the application process is simple.
Rules should support a desirable straight-through rate for automated processing.
Done properly, strong risk assessment guidelines and rules that provide a reasonable straight-through rate are highly likely to yield better applicant placement rates.
How to Change the Rules
Writing new accelerated underwriting guidelines requires a change in mindset to account for the significant differences between the medical evidence used for full underwriting and the digital underwriting data used for accelerated underwriting.
Medical evidence, such as lipid panels, offers numerical values for assessing risk.
Digital underwriting evidence, when applied to accelerated underwriting, works differently: It deploys various data points and application information in combinations that generate similar values.