Insurers Begin Lifting COVID-19 Underwriting Guidelines

By John Hilton

As many Americans return to post-pandemic normalcy, life insurers are as well, with many companies curtailing or eliminating underwriting restrictions that have been in place since March 2020.

American International Group informed distributers last week that it would return fully to pre-COVID-19 underwriting guidelines. AIG ranks 10th in life insurance and annuity direct premiums written in 2020, according to data compiled by the Insurance Information Institute.

Tim Heslin, head of AIG Life US, cited "positive COVID-19 case trends" in confirming the change through a company spokeswoman. AIG has reported full-year COVID-19 losses of $1.1 billion in 2020, although a significant portion of that came from its property & casualty division.

Several other insurers have returned partially or fully to pre-pandemic underwriting guidelines, said Mike Furgiuele, head of product and carrier strategies for Covr Financial Technologies. They include Pacific Life, Transamerica, John Hancock, Lincoln Financial and Securian Financial.

Changes range from the full restoration of pre-COVID-19 guidelines to John Hancock removing the supplemental application question “Have you, or anyone in your household, been exposed to any person known to have tested positive for COVID-19?”

'The Greatest Impact'

Life insurance application activity continued a pattern of record-breaking growth in April with year-to-date activity up 10.2%, according to the MIB Life Index. Year-over-year activity in April 2021 was up over April 2020 by an impressive 10.7%.

However, a Deloitte survey found that the motivation to buy life insurance waned along with the pandemic danger in 2021. Easing underwriting restrictions could be a boost the industry needs to keep sales high.

“This recent trend among top insurance carriers has the greatest impact on a large segment of older or less healthy (table-rated) Americans that have not been able to apply for needed life insurance coverage for over a year,” Furgiuele explained in an email.

Covr provides a digital life insurance platform and works with most of the main insurance carriers. The company expects an increase in sales both in the advisor-driven and direct-to-consumer channels over the next few months as carriers will now underwrite this segment of Americans previously denied life insurance under the temporary underwriting restrictions employed by carriers, Furgiuele said.

The "vast majority" of carriers are still doing business with some pandemic restrictions in place, he added, but it expected that those restrictions will continue to be lifted in the coming weeks.

John Hancock went beyond just lifting underwriting restrictions. The insurer is rewarding Vitality customers with Vitality Points for getting their COVID-19 vaccine. The Vitality program combines life insurance with a technology-enabled program that offers education, support, incentives, and rewards for members who meet fitness goals, for example.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected] Follow him on Twitter @INNJohnH.