Insurers Look to AI to Improve Speed, Convenience of Underwriting

Advisors can expect easier and faster application and underwriting processes at insurers as human intervention cedes to artificial intelligence, noninvasive medical reviews and data analytics, the Society of Actuaries said in a new report.

The report points to an industry facing inevitable change forced upon it by a marketplace demanding convenience and faster turnaround times, the SOA and other experts said.

Even life insurers handling 30 percent of cases without human intervention are “ahead of the game,” said Thomas D. McCarthy, a member of the SOA committee that prepared the data gleaned from 24 direct life writers in the U.S. and Canada.

Data from results published in the “Improving the New Business Process Survey Report” was conducted in the fall of 2016. Underwriters and actuaries were asked to project the state of their companies 12 to 24 months into the future.

While that move toward digitalization and data mining spells job uncertainty, allowing machines to take over basic functions means underwriters can be redeployed to more valuable jobs such as building new underwriting rules and data fields, McCarthy said.

Three-quarters of insurers responded that their underwriters worked remotely at least some of the time, the survey found.

Changes in Policy Delivery

More than half of the responding companies said they expected to receive web-based applications over 80 percent of the time, the survey found.

Applicants fill out web-based life applications using a browser, and are different from electronic applications, or e-apps, delivered via email in PDF or Word format.

Career agents were most likely to use e-apps, with one-third of respondents saying more than 80 percent of their company applications were received via e-apps, the survey found.

In the brokerage distribution channel, a third of responding companies said they used e-apps at least some of the time. Almost all of responding companies accepted electronic signatures and nearly one-quarter accepted voice signatures, the survey found.

Three-quarters of companies received new applications using paper and e-apps, but plan to rely more heavily on web-apps and centers, the survey found.

“The switch to e-apps is a no-brainer for firms as they look to have more efficient processing, fewer errors and quicker processing,” said Howard Schneider, a consultant to the financial advisory industry. He wasn’t involved with the SOA research.

One-quarter of insurers sent the policy electronically to the agent or broker-dealer, and 21 percent of companies sent the policy electronically directly to the policyholder, the survey found.

In 2010, the last time insurers were surveyed, only 5 percent sent the policy electronically to the agent or broker. Five percent of companies sent the policy electronically to the policyholder.

“We’ve evolved quite a bit in that time,” McCarthy said.

Changes to Underwriting Requirements

Of the 27 listed individual underwriting requirements, the most common to be added over the next two years were predictive analytics and credit scoring, the survey found.

Insurers anticipate using predictive analytics, prescription database queries and the tele interview more frequently, the report found.

At the opposite end of the spectrum, insurers said they would rely less on expensive and invasive medical exams.

Insurers reported decreasing use of paramedical exams, blood profiles, electrocardiograms and attending physician statement guidelines.

The correlation between faster underwriting procedures and an insurance company’s ability to issue higher policy limits to the $500,000 or $1 million range is “totally reflected in the survey,” McCarthy said.

Other requirements such as PSA (prostate-specific antigen) levels, and hemoglobin weren’t expected to change, survey respondents said.

While insurers value faster underwriting processes and better customer experience by mining motor vehicle records and prescription drug databases, only half of the insurers were able to approve 80 percent of cases within 30 days.

Insurers have work to do to cut approval times, said Samantha Chow, senior life and annuity analyst with Aite Group, who was not connected to the SOA survey.

Some insurers anticipate relying less on specific medical records requests. Other underwriters said they would continue to request medical records, known as an attending physician statement, or APS, from the family doctor.

“Getting an APS takes time and reviewing it also takes time, which adds to the overall onboarding process rather than reduce it as carriers are looking to do,” Chow said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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