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February 16, 2024 at 11:13 AM
What You Need to Know
- Full underwriting is a lot different from simplified-issue underwriting.
- The conditions life insurers always watch for turned out to have a big effect on COVID mortality.
- For an insurer with full underwriting, the surge in non-COVID mortality is fading away.
Careful underwriting is helping U.S. life insurers get death claims back to normal, in spite of the lingering effects of COVID-19 on overall U.S. mortality, a top U.S. life insurance expert said earlier this week.
Fred Tavan, the chief pricing officer at Legal & General America, talked about recent U.S. life underwriting trends in an interview.
A new, quiet COVID surge began pushing up overall U.S. mortality in October 2023. But, when Legal & General America looks at its own COVID-related life insurance claims, “there’s very little there,” Tavan said.
After the COVID pandemic began, death rates for conditions other than COVID increased sharply. Some worried that COVID itself or reduced use of preventive care had done permanent damage. But “those were temporary effects that were highly correlated with strain on hospital systems,” Tavan said.
Now that hospital patient loads have stabilized, the increase in Legal & General America’s non-COVID mortality rate has faded.
What it means: U.S. life insurers have just passed through the second deadliest pandemic since modern life insurance came into existence, and they’re still eager to sell your clients life insurance.
Legal & General America: Legal & General America is a Frederick, Maryland-based subsidiary of Legal & General Group, a London-based financial services giant with $1.4 trillion in assets under management.
Legal & General America focuses on selling term life insurance through Banner Life in most of the United States and through William Penn Life in New York state. It has about 1.5 million U.S. policyholders.
The underwriting strategy backdrop: In 2020, when COVID showed up, life insurers responded to the early pandemic-period lockdowns by shifting away from use of in-person underwriting exams and application processes, toward digital-only processes.
Insurers without well-established digital underwriting systems tried to make do with simplified issue processes that operated without the physical exams and attending physician statements that underwriters have traditionally used to assess applicants’ health, Tavan said.
Some companies, like Legal & General America, were in a better position.
“We already had plans to go digital,” he said.
