AI: Speeding up the underwriting process

In our industry, we hear from advisors who see life underwriting as opaque and confusing, and its “make or break” nature can be frustrating. An unexpected underwriting decision can derail a new financial plan or trigger a scramble to find alternative coverage.

As underwriters for a major carrier and a life insurance brokerage, we’ve teamed up to share our thoughts on the evolution of underwriting — and what those changes can mean for advisors and their clients.

A data-driven future

Advances in technology are producing better data, which leads to faster, more accurate and less invasive underwriting. On top of a better experience, cost savings are eventually reflected in product pricing.

The way we use data is changing. Today, when reviewing a case, underwriters and advisors will collect as much data as possible, wanting to get the most accurate picture of the client’s medical background. We know medical and health data is imperfect, but advisors and brokerage teams still order reams of client data, often lengthening the underwriting process and incurring substantial costs.

Our teams recommend a more effective, graduated approach. When examining medical records, start with a review of basic information — usually electronic health records, which offer a survey of the client’s medical history but are less granular than other records. For example, an EHR might indicate that a client saw a cardiologist, but it wouldn’t include an EKG or the results of a stress test.

Using the EHR and information collected from the client, advisors can determine whether a deeper investigation is necessary, perhaps pulling prescription checks or a history of medications the client has been prescribed. Script checks can help advisors better understand a client’s medical history, identify specialty doctors that a client has seen or outline steps they have taken to manage any diagnoses. However, because a single medication can be used to treat a variety of illnesses, script checks can also complicate and extend the underwriting process.

For individuals with serious impairments, the next step is to order more detailed records or attending physician statements, which provide diagnoses, treatment plans, lab results and more. These records, like script checks, can introduce more noise and complexity to underwriting, but they also provide a clearer view of diagnosis and treatment regimens. For brokerage underwriters and advisors, the goals are to uncover unreported health concerns that could jeopardize or delay an application, understand how the client has managed any impairments and ensure that the application reflects all relevant details.

Balancing traditional methods with tech-enabled processes

As they have for decades, life insurance carriers also use technology to enhance countless processes, including the ability to make faster and more consistent underwriting decisions while reducing processing costs. Many use a combination of tech-enabled and traditional underwriting methods to achieve optimal results.

Tech-enabled features include automated underwriting, which can use specific underwriting grids to quickly place applicants in a rate class. While these platforms save time, they lack flexibility. Automated underwriting can approve a young, healthy applicant very quickly, while one with complex impairments might receive a worse rating than they would from a human underwriter — or be denied outright.

On the other hand, traditional underwriting allows carriers to consider the nuances of a client’s complex medical history. Traditional underwriting sometimes uncovers opportunities for credits — if, for example, a client has impairments but manages them well. Adding in this human element brings experience, context and risk profile alignment to the process. Of course, this kind of case-by-case flexibility generally results in longer review timelines.

As with brokerage review, the availability of EHRs and medical data has sped up the underwriting process by facilitating automated underwriting programs. This has reduced the administrative burden on underwriters, resulting in time savings of as much as 40%.

Digital medical records bring their own challenges. Today, many of these records are disorganized or incomplete, which can cause delays in piecing together medical history. Consider a client whose records indicate a diabetes diagnosis, but the details regarding treatment plans and lifestyle changes are missing from the record.

The promise of AI in underwriting

It’s widely expected that data quality and sophistication will continue to improve, leading to better underwriting outcomes. Likewise, artificial intelligence seems certain to become an increasingly powerful tool our industry can use to gather and analyze data.

AI models are evolving and are now being built to perform nuanced assessments of larger volumes of unstructured data, such as years of medical records. That will save underwriters time currently spent reviewing each page of the record, allowing them to focus on more complex cases and AI-driven analysis.

AI will offer additional benefits: easier management of large documents, compilation and archiving of key information, processing tasks like document review and data search, scheduling, and driving logistical tasks. This can help advisors stay informed and keep processes on track.

As that technology matures, it promises to handle even more sophisticated tasks. This will ultimately improve both the efficiency and accuracy of medical underwriting, leading to faster decisions for advisors and better results for their clients.

The life insurance underwriting profession has always been a balance of art and science. As algorithms grow more complex, human review and judgment will become more important than ever. Our future will be shaped by the speed of technological change but ultimately determined by the industry’s willingness to adapt and evolve.

Bryan Simmons is the head of underwriting for Modern Life. Contact him at [email protected].

Bill Wysong is the vice president and chief underwriter of independent distribution at Ameritas. Contact him at [email protected].