Insurers Dive Into The Digital End Of The Pool. Will It Last?

By John Hilton

Insurers were already welcoming technology and embracing ideas such as accelerated underwriting. But things move slowly in the insurance world.

Then the COVID-19 pandemic hit and insurers no longer controlled those timelines. Suddenly, advisors had to sell over Zoom meetings, medical exams had to be skipped and electronic signatures were a must.

It signaled an important, if forced, step forward for the industry, said Karen Terry, senior research director, insurance research for LIMRA. She is moderating a panel discussion today titled "COVID Silver Lining: A Simplified Purchase Process" at the virtual Life Insurance Conference from LIMRA, LOMA and LL Global.

In a 2017 LIMRA survey, 50% of companies that responded said they were using automated underwriting. In a similar survey in 2019, 62% of carriers said they used automated underwriting while 64% said they were using accelerated underwriting.

That figure rose higher during 2020 and the pandemic.

"We saw companies making changes and expanding their automated underwriting programs," Terry said. For example, "if you can't have a physician's visit, or you can't have a paramedical exam, allowing for a doctor's letter or medical results in place of that."

According to LIMRA research, about three-quarters of carriers are investing in automated and accelerated underwriting programs. The result is a life insurance buying experience that is considerably shorter than in the past, generally about a week instead of several weeks, it was revealed in a separate session.

Better Sales

Perhaps not surprisingly given the pandemic reality, some life insurance products sold better over the past year, Terry said. At least some of the credit belongs to insurers for embracing new technologies, she added.

"Term and whole life, in the middle of the main part of the shutdown, did a lot better," she said.

Other, more complex, life insurance products, took a little longer to hit their sales stride, Terry explained.

"It's harder to talk to people about some of the more complex products that we have when can't necessarily meet with them face to face," she noted. "Some companies that did really well with those products. There may have been a bit of a slowdown while they were figuring out the underwriting and how to digitize some of their processes."

David Peters is director of individual operations for Principal Financial Group and participated in the panel discussion. Principal is one of the companies with expansive digital operations and recently announced a new partnership with the FINEOS cloud-based platform.

The FINEOS Platform capabilities including absence management, billing, claims, payments, policy administration, provider management and new business and underwriting; all of which are configurable to operate independently or optimally as FINEOS AdminSuite, an end-to-end core administration suite. The system includes real-time analytics that utilize core system data to enable business insights and automation.

While making the March 30 announcement, Principal executives stressed the speed of delivery accompanying the FINEOS platform.

The upgrade "will allow us to deliver a faster and more streamlined customer experience through their innovative, agile system,” said Cheryl Paine, AVP of specialty benefits claims at Principal. “Not only will this help us get benefit payments to customers even more timely but also will position us to adapt more quickly to evolving customer expectations.”

A Horse Race

If digital adoption were a horse race, there are some insurers jockeying for the lead, while others are several lengths behind.

"A lot of companies have the ability to do e-signatures," Terry said, "but not all of them are at that point where they're automatically delivering policies digitally."

Terry plans to survey companies to find out whether they plan to stick with their digital advances, or return to a pre-pandemic business delivery model.

"We're going to reach out to our companies to find out exactly if they've made some of this permanent or not," she said.

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.