Accelerated Underwriting Leaps Forward Since 2017: LIMRA Survey

Accelerated underwriting continues to be a hot topic in the life insurance industry, and it has been the subject of multiple industry surveys. So what have we learned from those surveys?

Mary Lesch, LIMRA associate research director, and Lisa Seeman, second vice president and actuary for Munich Re, were scheduled to present the results of recent LIMRA and Munich Re accelerated underwriting surveys during the LIMRA Life & Retirement Virtual Conference.

The major challenge life insurance carriers face in implementing accelerated underwriting is allocating human resources to the task, Lesch said.

“So in order to address that challenge, they are establishing dedicated cross-functional teams within their companies,” she added. “But they also are establishing new relationships with external partners such as reinsurers. Application vendors or subject matter experts are also facing significant financial challenges and, in order to address that, many are limiting the scope of their program or delaying implementation of accelerated underwriting.”

Accelerated underwriting and automated underwriting continue to evolve over time, the surveys showed.

In a 2017 LIMRA survey, 50% of companies that responded said they were using automated underwriting. Accelerated underwriting wasn’t much of a factor at that time, Lesch said. In a similar survey in 2019, 62% of carriers said they used automated underwriting while 64% said they were using accelerated underwriting.

“So accelerated underwriting caught up to automated underwriting and then some,” Lesch said.

The COVID-19 pandemic also has affected accelerated underwriting. LIMRA expects to see carriers change the terms of their requirements for accelerated underwriting, Lesch said, including changes to face amounts and age requirements.

“The program might become more like traditional underwriting,” she said.

Carriers also are shifting the types of data they rely on for accelerated underwriting, Lesch said.

“Pharmaceutical databases continue to be the most common type of data that carriers rely on. But credit records are growing in importance. In 2017, we saw that 18% of carriers relied on credit records. By 2019, that percentage grew to 49%.”

Another type of data increasing in importance is consumer data, with 2% of carriers relying on it in 2017 but 29% using it in 2019, Lesch said.

Electronic health records have remained unchanged since 2017 as far as their use in accelerated underwriting, she added, with 39% of carriers saying in both surveys that they rely on them.

LIMRA and Munich Re also looked at whether carriers were meeting their goals related to implementing accelerated underwriting. The most common goal is the policy issue time, Lesch said.

More than 80% of carriers responded that they were meeting their goal for policy issue time in 2019. LIMRA found that, on average, the average time for a decision was reduced by two-thirds from 27 days for traditional underwriting to nine days for accelerated or automated underwriting.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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