Once again, Susan Ghalili, Senior Vice President, Underwriting Strategy & Chief Underwriter, and the Pacific Life team put together an excellent slate of topics and panelists for the Pacific Life 2025 Underwriting Symposium. The topics discussed were foremost in the minds of all attendees concerning the current and future state of the life insurance industry, especially as it relates to underwriting.

Most platform discussions were in a panel format with panelists from Pacific Life, Distribution, Reinsurance, Medical Directors, and Technology contributing and participating.

This is "Part One" of a continuing three-part blog featuring highlights of the sessions that took place during the meeting.  Parts Two and Three will be posted in the next two weeks - so after you read this, stay tuned - there's more to come!   

The panel began with the results of Pacific Life's record sales year in 2024, achieving $600 million of annualized commissionable premium. The company's business is well-diversified across consumer markets, multiple distribution channels and product lines, with a balanced approach to protection and accumulation products. The company anticipates another successful year in 2025.

While the number of active life insurance carriers has decreased from roughly 2,100 in 1995 to about 750 currently, the decline is due to carriers exiting the life insurance market rather than failing. In fact, the industry remains robust, offering multiple avenues for consumer sales:

• Multilevel marketing for direct sales
• Online, direct-to-consumer sales
• Career companies targeting the mass affluent market, and
• Producer and institutional groups, along with brokerage firms, catering to ultra-high-net-worth clients.

The panelists noted that merger and acquisition activity is closely tied to capital markets. The period from 2020 to 2023 saw significant consolidation, driven by low interest rates and increasing leverage. However, there was a substantial pullback in 2023-24 as capital markets closed. Despite this, acquisitions continue, with major investments in technology to support agents and their customers, some of which is proprietary. 

• Relevance remains critical in both our operations and our customer outreach initiatives. With fewer policies being issued today, growing the industry involves reaching all market segments—affluent, middle and broad markets. Simplifying business processes for advisors and using a diversified model that incorporates both technology and personal interaction are essential strategies.

• How can we unite and expand the market? Are our products relevant? Advisors should take a holistic approach and emphasize protection products. There are an estimated 102 million uninsured and underinsured adults in the U.S. who say they need life insurance or more of it, according to LIMRA's 2024 Insurance Barometer study.. We need a unified message to consumers, regulators and others about the importance of protection.

• Who are the next generation producers? How do we help businesses grow? Groups grow by selling more products, adding producers and increasing margins. We must embed life insurance within RIAs, P&C companies, and banks. Carriers will train new producers but face poaching issues.

• Planning for business continuity and succession, creating pathways to ownership for new generation producers. Carriers need technology that supports meaningful relationships for these individuals.

• Underwriting may need to adjust for new producer alignments and markets—creating teams that provide specialized support for various sectors.

• Leveraging technology and relationships to build scale. Understanding markets and creating models tailored to them. It's crucial to have business talent that understands partners' needs.

• Tech and AI require data. Chat GPT's weakness is fabrications.  Start with warehousing your own data, and use closed AI for internal inquiries, layering technology and relationships on top.  Use AI to leverage information within the inforce business block.

• Technology is capital intensive but necessary. Use tech and data to support distribution, integrate quickly and build a sustainable long-term business model.  Invest in partnerships to weather volatility.  Bridge the gap between need and value proposition and present a unique story.  There's no better time than now.

The panelists began by discussing large case underwriting programs, such as Auto Excess, which provide substantial reinsurance capacity. Pacific Life has implemented such a program, enabling significant coverage to be ceded to reinsurers without the need to share medical and financial case file details. When evaluating requests for Auto Excess programs, reinsurers consider multiple factors, including the carrier's historical performance, financial stability, ownership structure, underwriting guidelines, the expertise of the chief underwriter, and the effectiveness of internal underwriting controls.

SCOR uses retrocessionaires to expand capacity but does not include Auto Excess arrangements within its retrocession pool. Companies granted Auto Excess capacity, such as Pacific Life, may adjust underwriting guidelines when justified, though they must undergo periodic audits to ensure the integrity of their underwriting decisions.

Swiss Re conducts a thorough evaluation of potential carrier partnerships, assessing opportunities, underwriting controls, and overall quality before participating in Auto Excess programs. Additionally, Swiss Re maintains a dedicated team that routinely updates its underwriting manual. Pacific Life may also modify its manual based on experience, subject to reinsurer approval. In the context of foreign national business, certain global reinsurers establish risk guidelines specific to different countries and conduct regular monitoring to maintain compliance.

Reinsurers frequently review other reinsurance manuals for comparison, as industry standards tend to align. However, some organizations, such as RGA, focus on specialized risk categories, including cases involving body build and diabetes.

Succession planning within underwriting has become increasingly important as the industry anticipates significant retirements over the next five to six years, raising concerns about the potential loss of critical knowledge and expertise.

The panelists identified several challenges within the reinsurance sector. Key pain points include internal governance and ongoing evaluation, limitations on time available for staff management, insufficient financial data in certain cases, and a lack of direct visibility into operations at the carrier level. 

Despite these challenges, the industry continues to refine underwriting processes to ensure accuracy, maintain operational efficiency, and adapt to evolving market conditions.

The foreign national market remains a strong avenue for business expansion, particularly in serving high-net-worth individuals with US property holdings and other personal or commercial ties. These applicants typically seek US dollar-based contracts while prioritizing asset protection, privacy, and security. Success in this market hinges on thorough due diligence and strategic relationship-building.

Carriers vary in their willingness to engage with foreign national clients, with Pacific Life standing out as a leader in this space. However, many cases are not optimally prepared or structured, requiring tailored discussions and negotiations to address unique complexities.

For life insurance underwriting, key considerations include establishing a clear US nexus, ensuring solicitation takes place within the US for domestic carriers, and structuring policies under US ownership when foreign entities are involved. Insurers remain vigilant in assessing geopolitical risks and may temporarily halt coverage in response to emerging global hot spots.