An Expert Panel Discussion: Where we stand today and what the future holds for underwriting

Much change has occurred in underwriting and the underwriting process during the past couple of years.  A great deal of this has centered on how to make life insurance more accessible for prospects who are demanding a faster, better and less invasive application process.  While at the same time, carriers attempt to balance these changes with predictable mortality results.

To understand what's happening in the underwriting industry and what the future may hold, we engaged three high profile underwriting industry experts and thought leaders to answer a few questions about their views on today and their vision of what we may expect down the road.

Our panel of experts include:

Susan Ghalili:   Senior Vice President, Life New Business and Underwriting, Pacific Life.  Susan is responsible for all aspects of Underwriting and New Business, business transformation and customer journey.

Neal Halder:   Vice President and Chief Underwriter, John Hancock.  Neal is responsible for all aspects of Underwriting including underwriting operations, support, R&D and innovation, automated rules and medical.

Gretchen Juneau:  Vice President of Traditional Underwriting, Prudential.  Gretchen has overall responsibility for developing a vision and strategy for Prudential's underwriting and medical departments.  Her primary focus is on utilizing innovation and technology to deliver an efficient, high quality underwriting experience allowing Prudential to reach more customers, while continuing to foster an environment of learning and an evolving mindset for the underwriters.


Here are the questions we posed and their responses.

So much of what's occurring in underwriting today involves the use of data and technology to enhance the underwriting process, making it easier for consumers to acquire coverage.   On a scale of 1 to 10, with 1 being just starting and 10 being done, where are we on this journey and why?

Gretchen:  I'd say that overall, we're somewhere between 7 and 8.  Good structured data, obtained within minutes, continues to evolve and that is a critical factor in the journey.  Underwriters, actuaries and data scientists have had a few years now to study the new data sources and are finding ways to accelerate more cases (no exam/lab) using new data and new methodologies.   I see the industry being in more of a refinement stage at this point.   Now that we have some experience, how do we make sure that we're ingesting the data accurately, and then take what we've learned and make sure that we're balancing all of the critical elements associated with underwriting:  pricing, mortality and the client/producer experience.

Susan:   I'd say 4.5 to 5.   It's a long journey and we are just beginning.   We have found pieces of opportunity and are getting comfortable with where we are today.   One big question is how long will we stay in the current zone and what new opportunity and/or additional information will further enhance the underwriting process?  Many of the enhancements today have been focused on lower face amount applications.  There is also opportunity to apply similar principles to high-end, large face amount markets and doing things faster and better.

Neal:   I'd say we're at a 4.  I would have hoped we'd be further on the journey but it feels like we're bit stalled with electronic medical data.  The information is there but we haven't fully captured its capabilities, due to both lower than expected hit rates and not having the data in a useable form.


In your view, what are the next steps in the evolution of the underwriting process, and what hurdles — human and technological -- must be overcome to get there?

Neal:   We must continue to push ourselves to only get the information needed to underwrite the risk.  It's both a human and technological hurdle.  On the human side it's getting applications completed electronically so we have data we can leverage to make the determination of underwriting requirements for the individual risk.  On the technology side we need to have a process in place to allow the gathering and sharing of information between the advisor/agency and carriers.


Gretchen:  Great question and I'm sure everyone might have a different spin on this.  If our goal is to reduce the invasiveness of the life insurance exam and lab, then we need to make sure we have a viable alternative that will give us similar mortality experience.  Electronic Health Records have come a long way in the past few years, and we have to continue to study the data provided and find ways to utilize it in our process.   Maybe we can even collect exam data in a different, non-traditional way.

Here's another thought:  In some segments of our business we have to be comfortable with underwriting the masses vs. underwriting the individual.  Certainly not in every market, but for a small face amount term policy, we should focus on speed and accuracy but perhaps not precision.

Susan:  There are a few major hurdles.  The first is regulatory.  We must pay close attention to using data and pricing risk appropriately.  Along with this comes doing a better job of building and articulating our models and use of data to regulators.  Customers are Amazon-minded demanding quick and easy transactions.  Also, it's our desire to get products to more customers easier, faster and cheaper.  These objectives require high level engagement and regulator alignment to achieve what we all want to do.  Second, much has been done working with direct and reinsurance pricing actuaries on data and modeling.  However, as indicated already, we are at the beginning and more engagement is required to see additional progress.  Lastly, change is difficult and old habits die hard.  Enhancements are exciting but require ongoing field office and producer commitment to the process and doing things differently.


We and our producers are heavily relationship-oriented and require a high level of engagement and transparency in the underwriting process and with underwriters.  How will the use of data and technology help or hinder these things?

Susan:   It is necessary to bring distribution to the table to show what we are doing with data and technology, and then partner with them and their offices to implement.  This creates transparency, trust and buy-in and success if the process is good.  One key point to remember is progress occurs incrementally.  There is no big bang, only small wins.  What we are trying to do must work before implementing changes, and distribution buy-in is required.

Neal:   Done well, technology and data should enable this to continue and enhance it.   The roles may change slightly in the process but our goal with new capabilities is to provide a better experience for the applicant, advisor/agency and improved effectiveness and efficiency at the carrier.

Gretchen:  Even just a few years ago, every carrier pretty much used the same data sources:  MIB info, an identity check, some type of prescription data, driving data and usually an exam and lab.   APS's were the norm and Electronic Health Records were rarely utilized.   There may have been some variation by age and amount, but generally the same data was used.

Fast forward to 2022 ---  there is no longer a "standard set" of underwriting requirements and I can see how that would be challenging for a producer.  Sharing requirements among carriers is more difficult and the "predictability" element of underwriting has changed.  It may be harder to find the best carrier for the client's individual situation. The good news is that the client wins no matter what.  A highly automated process, from submission to an online interview to electronic delivery, provides the experience that people simply expect today.   While we can't deliver an "Amazon-like" experience in all cases, how can we make it as streamlined as possible, while keeping the producer informed every step of the way?   Technology will certainly play a role.


What does the future of underwriting look like to you?   What can we in distribution expect and look forward to?

Gretchen:  If only I had a crystal ball ?.  Data will continue to play a huge role in underwriting but when you think about it, hasn't it always had a huge role?   The difference now is that we'll need it to be structured in such a way that it can be ingested into models and rule engines.  Transparency will be critical and Underwriters will continue to partner with Data Scientists to ensure that automated decisions are in alignment with our guidelines and can be explained to our producer and clients.

Susan:  Dynamic, real-time underwriting is the future.  And a great place to start is with informal cases, where some 40-45% of applications for many carriers start today.  This is a personalized and transparent process where digital health data is accessed right at the beginning of the process.  In doing this, medical data is received and handled quickly, and applications are more effectively triaged to arrive at an underwriting decision.  The entire process provides a faster and better customer experience for everyone involved.

In addition, where it makes sense, there will be different business models for different markets.  This is not a one type fits all type of thing.


Neal:  The underwriting experience should become more personalized to the applicant, with an improved experience including real time decision-making and approvals.  For distribution the use of technology throughout the application, underwriting and policy issue process will create efficiencies and opportunities to serve clients in a more personalized approach without sacrificing timeliness.


We want to thank our panel for their insight and vision, and hope you find this information valuable to better understand our current underwriting environment and what the future may hold.

As new processes develop and evolve, Windsor will continue to be a trusted source to share this information with you.  Thanks for joining us!

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Saturday, 13 April 2024

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