The 2024 Pacific Life Underwriting Symposium took place recently with an excellent slate of discussion topics and life insurance industry representation.  Most platform discussions were in a panel format with Pacific Life, Distribution, Reinsurance, Retrocessionaire and Technology representatives contributing and participating.

It's not often that we have the opportunity to pull together important life industry players to exchange views on critical and relevant underwriting topics that impact our businesses.  Congratulations go to Susan Ghalili and her team at Pacific Life for being able to accomplish this goal and provide outstanding content and discussion.

Below are summary highlights of each of the sessions that took place during the meeting.

CEO Panel—Bright Sun or Darkening Skies Ahead?

Moderator: Susan Ghalili, SVP Underwriting Strategy & Chief Underwriter, Pacific Life

Dawn Behnke, Executive Vice President, Consumer Markets Division, Pacific Life

Neil Sprackling, CEO, Life & Health US Business, Swiss Re

Marc-Andre Giguere, President and CEO U.S. Life and Health, Munich Re

Michael Babikian, CEO, First Financial Resources

• The life industry is going through a transformational period with the use of technology and data. It may seem daunting at times to stay ahead of what is happening, but the future is bright if we focus our attention and energies on the customer experience.

• While each of the panelists represented different organizations and occupied different places in the value chain, their common goal is to provide access to life insurance products to potential customers.
• The industry must stay focused on customers and be efficient and effective in using technology and data to help people buy coverage.  All interests must be aligned and have continuing open communication to accomplish this end.
• The life industry is going through changes, and we must decide what we want to change and what we want to keep and not change.
• Underwriting has a key role to play and all parties in the value chain must act together and make it faster and easier for the customer to acquire coverage.
• Technology is a tool to enhance relationships and help producers be more effective.
• It's also important to understand the limitations of technology and what it can and cannot do.  Technology often arises outside of the life industry and creates chaos and confusion.  It's important not to chase shiny objects that do not enhance what we as an industry are trying to accomplish.

Transformation and the Regulatory Environment

Moderator: Jolee Crosby, President & CEO Swiss Re Canada & English Caribbean

Kari Turigliatto, AVP & Managing Assistant General Counsel, Pacific Life

James Atkins, Vice President, Underwriting Data Innovation & AUW Analytics, SCOR

Tom Fletcher, SVP, Global Head of Data Science Consulting (L&H), Partner Re

• The life industry is methodical and typically slow to make changes as it pertains to use of data and technology.  This is probably good due to various state insurance departments and regulations, especially as it relates to unfair trade practices which may limit or eliminate the ability of carriers to underwrite. There are initiatives going on today addressing these issues, with Colorado being a major focus.
• The use of artificial intelligence (AI) is primarily in the experimental stage in the industry. There are several possibilities for the use of AI, but the industry must think through these methodically and carefully to determine impact and potential unintended consequences.  In addition, it is imperative to have human oversight of AI output.
• At present, AI is being used in a few areas in the industry for informational purposes for some aspects of claims administration, and customer engagement with the use of chatbots.
• Before implementing AI, companies need to evaluate use cases, look at the process, understand security issues, and do pilot projects. It's important to understand what AI can and cannot do and be aware of inconsistency that may arise using AI-related models. Transparency is key.  It is important to be critical and careful, especially as it pertains to regulation and the use of AI.
• AI won't replace underwriters. It will enhance the underwriting role and allow underwriters to focus on situations that require their skills and abilities. It is important that underwriters stay engaged and be part of the AI development process.

From Accelerated Underwriting to AI

Kilian Blum, Head of Tech Strategy, Swiss Re

Hareem Naveed, AVP, MLOps & Governance, Munich Re

• AI is a fast-evolving field with many moving parts.
• AI began in the 1950's with the advent of expert systems. This became machine learning, then deep learning and is now in its latest evolutionary step called Generative AI.
• Large Language Models in use today have the lowest barriers to entry for companies. It is a tool that accelerates the ability of the industry to digitally and effectively process information.
• Companies need to be aware of fairness, risk selection and ethical issues when implementing AI.

Embracing Change--Underwriting Data and Technology

Moderator: Andy Kramer, VP, Underwriting Risk and Innovation, M Financial

Ken Leibow, CEO, InsurTech Express

Dave Dorans, CEO, Clareto

Nick Zambruno, Sr. Solutions Architect, LexisNexis

Jennifer Glessner, AVP Underwriting Transformation & Customer Journey, Pacific Life

• COVID accelerated the use of data and technology in underwriting by at least 5 years. The use of data and technology has enhanced cycle time and improved placement of coverage.  The industry is now at another critical point to determine where our next investments and bets will take us with the use of technology.
• We now get data from client electronic health records, health information exchanges, health portals, claims databases, historical lab results and several other sources. Each source has strengths and weaknesses along with redundancy of information.  Which data sources are the most beneficial and how do we most effectively use them?  Which will provide what is needed?
• Getting more information is not the answer. The major question to be answered: Is there enough information on hand to quickly and accurately make decisions, and if not what else is needed and how do we get this information?
• There may be differences in the types of data collected for different markets in which carriers do business.
• There is a common Accord application being worked on at present that will help streamline the application and underwriting process, assuming there is adequate industry adoption.
• To be successful, the use of data needs to be transparent.  We don't want and stakeholders will not accept black box solutions.

A Fireside Chat--Global Citizens and Insurance

Moderator: Susan Ghalili, SVP Underwriting Strategy & Chief Underwriter, Pacific Life

Matthew Douglas, Vice President, Business Development, NFP

Victoria Mayer, Managing Partner, Passerelle Partners

Rodger Hergenrader, Vice President, Underwriting Advocacy, M Financial

Mary Poynter, Director, Life Underwriting, Pacific Life

• Big opportunities exist in the Ultra High Net Worth (UHNW) foreign national market. There are many large premium cases in this market.
• There are unique challenges in this market such as potentially less access to medical records, no narratives provided in the records and different medical tests completed by an UHNW's physician.
• The US dollar contract is key to applicants in the UHNW market, and because of many UHNW applicants' US based bank and investment relationships, many have been vetted by governmental sources which aids in the application process.
• Premium financing is being done successfully in this market.
• Education of advisors, CPAs and other centers of influence is important to understand tax and other issues pertaining to this market. Being aware of solicitation rules are critical.

Financial Underwriting—Complex Concepts and Planning Strategies

Chris Cook, Senior Vice President Underwriting, Crump Life Insurance Services

David McNamara, Underwriting AVP, Pacific Life

Lisa Link, Director, Life Underwriting, Pacific Life

• Packaging a case in the large case market is critical.
• The key is to minimize the back and forth and ask yourself what is truly needed to make a decision.  It is important for the applicant to have a positive experience.
• Cover letters are critical and set the table for the need and purpose of the sale.
• The internet is a great tool to use to collect publicly available information.
• If unsure of what is needed, pick up the phone and have a discussion with your underwriter. Your underwriter is your best source of what may be needed and will be your advocate.
• Charitable, Expected Inheritance, and Newly Formed Business cases can present unique challenges.
• For Charitable cases, while it's important to look at past giving history, also include the value of the insured's donated time working with the charity on various tasks or projects.
• With Expected Inheritance cases some questions to be answered include identifying all parties to the arrangement, determining if irrevocable documents are in place, making sure trusts are funded and verifying others in a particular class are similarly insured.
• With Newly Formed Businesses cases, some questions to be answered include reviewing the track record of key people being insured, reviewing the proforma, understanding the business sector where the business operates, detailing monies invested in the business and by whom, and verifying if there are customer contracts in place.
• For trust owned policies, questions to ask include who is the grantor, who is the ultimate beneficiary, does the arrangement being proposed make sense, and where is the trust situs if looking for creditor and other protections.

Keys to Success—A Distribution Perspective

Moderator: DuWayne Kilbo, SVP & Chief Underwriter, Windsor Insurance

Diana Greenberg, President, Total Financial

Sally Yubeta, Insurance Underwriter, Lindberg & Ripple

Kristin Haines, Director of Underwriting & Operations, Innovative Benefits Consulting

Tricia Arnone, President, TAP Planning Services

• Important things to look for in a carrier partner include carrier capacity, trust in the carrier to work with distribution and advocate for your case, the ability to work close with underwriting and access to advanced planning if needed.
• Establishing and maintaining carrier relationships at all levels at a carrier is critical for any case, but especially in the large case market.
• Sales concepts/ideas evolve with changing interest rates and subsequent product changes. Having access to specialists who understand these changes is important
• Hiccups and unknowns will occur in the underwriting process due to changes in client health or other issues that may arise.  Clear and honest communication between distribution and underwriting is critical to strategizing and reaching the best solution possible in these situations.
• Client expectations have changed compared to just a few years ago.  For a myriad of reasons insureds don't or won't provide needed application information, whether it be medical or financial information or something else that may be critical to the underwriting process. It's important to set client expectations up front for what is needed and why.
• Being involved in underwriting and other study groups within an organization or the industry is critical to keeping underwriting skill sets sharp and up to date.
• Technology is critical to the long-term success of our organizations.  We need to explore technological solutions and find ways to use these effectively.
• Industry challenges include having immediate access, if needed, to underwriting decision makers, and cycle time on case review.

The Power of Partnership—a Reinsurance Update

Moderator: Susan Ghalili, SVP Underwriting Strategy & Chief Underwriter, Pacific Life

Mike Happold, Head of Facultative Underwriting, Munich Re

Jeremy Lane, Head L&H Mortality Services US/Managing Director, Swiss Re

Mike Hesse, Divisional Chief Underwriter, Berkshire Hathaway Group

Tiffany Hyde, SVP, Head of Underwriting, Lion Street

• Retrocessionaire (aka: Retro--a reinsurer's reinsurer) capacity has increased by 80% in the past few years, adding more industry capacity for large cases.
• Swiss Re and Munich Re have both limited use of Retros since the large size of their corporate balance sheets don't require risk to be laid off to others. They are able to absorb risk themselves.
• Reinsurers provide capacity and consultation to direct carriers.  It's important for them to understand carrier ability and depth in the market in which they operate.
• On large cases, it is critical to stage these appropriately, otherwise needed capacity may be withheld by reinsurers.
• On facultative jumbo cases, over 90% of the time the reinsurer will have the same offer as the direct writer.  In situations where the decision is different, there is opportunity for reinsurers to make a business decision or negotiate another resolution.
• Retros have very limited opportunity to provide business decisions since their margins are very thin.  A possible option is for the reinsurer to pay the correct rate to the retro but accept the case on their paper at a lower rate class.
• Reinsurers aggregate mortality among several direct writers of business.  Because of this they see mortality trends emerge much quicker than direct writers. This also pertains to understanding and using algorithms and data to underwrite.
• It doesn't appear the common industry jumbo limit of $65mm will be increased in the near future.   Even with the large balance sheets of Swiss Re and Munich Re they are sensitive to volatility that may impact their financials.  Both these carriers operate in many different products and markets beyond life insurance and have experienced significant COVID related losses. There is continuing discussion on this topic but more time and consistency of financial results are required before any changes are made.

What's on the Horizon for Underwriting in 2024 and Beyond

Moderator: TJ Doan, AVP, Broad Markets & Assistant Chief Underwriter, Pacific Life

Jennifer Glessner, AVP Underwriting Transformation & Customer Journey, Pacific Life Lori Walker, Vice President & Chief Underwriter, Diversified Brokerage Services

Kim Schrass, Director of Underwriting, Ash Brokerage

Jenny Canas, SVP Product, Underwriting & Operations, SelectQuote Insurance Services

• Most carriers have automated and accelerated underwriting (AU) and it is here to stay.
• The industry still has not realized the benefits of AU.  We are still learning how to handle lab free versus limited versus full underwriting processes.
• The definition of success relies on experience and consistency of results.  Expectations are key to this process.
• Electronic health records and APS pivot in the AU process are helping with expectations. The use of data doesn't allow for as much info sharing/transparency in the underwriting process which causes issues with customers.
• An advisor who is not as invested in the life process or underwriting can be challenging, such as RIAs, investment advisors, and others.  We need to understand how to better market to them.
• AI and technology show promise to allow more personalization and questions specific to an insurance applicant.
• There are many change management issues with the use of AI and technology that need to be managed to in the future.
• AI and technology will change jobs but not eliminate them. There is the need to rethink processes and engage people in change.
• The future role of the underwriter will allow them to work on more complex and important cases that require their skill set.  Future underwriting skill sets will require collaboration with data science and actuaries, with a need to understand data.

We are in a period of transformation. It's important for us to be knowledgeable and aware of any changes occurring so we can adapt and remain successful. This meeting was an opportunity to equip ourselves with insight to help accomplish this goal.

As ideas develop and processes evolve you can count on your partnership with Windsor to share what we learn with you, so that we can serve our customers better and grow our businesses successfully together.