Inclusion Through Underwriting Innovation

Insurance is rooted in analyzing risk and yet no two risks are created equal. More complicated diagnoses are too often labeled as “impaired risk” without a second look. The instant decision apps and websites popping up on every corner tend to live in black and white: approved or declined. And yet, humans aren’t as binary as computers try to make them. They’re complicated, loving, funny, messy at times and multifaceted.

With humans at the center, underwriting can change from a singular focal point and expand to see whole new vistas and opportunities to help protect brighter tomorrows for more families. In 2018, Legal & General America (LGA) saw an opportunity to shift its, and the industry’s, approach to underwriting through digital transformation. By implementing technology with effective and relevant solutions it developed tools that support seeing the larger picture, and people for who they are.

Five years later, LGA is using advanced data analytics and incorporating medical advancements into underwriting assessments, to provide a more inclusive approach to underwriting. Well-informed underwriting decisions, under the guidance of experienced underwriters, can easily be accelerated with the assistance of advanced technologies and data.

“Our accelerated underwriting program coupled with our ability to connect with electronic health records (EHRs) automate some of the more tedious application processes, freeing up time for applicant, advisor and underwriter,” said Zach Pugh, chief underwriter at Legal & General America. “Our underwriters can then spend their time on the more complex applications that require a more hands-on approach.”

This technological innovation is also driving inclusivity through increased accessibility and accelerated risk assessment. These lanes merge into LGA’s underwriting superhighway, guiding the expansion of coverage through the underwriting guidelines that LGA employs -- all lanes aiming toward closing common industry coverage gaps.

Per the Centers for Disease Control and Prevention, 37.3 million Americans – about 11% – have diabetes, historically a hurdle for life insurance applicants. Knowing that there are constant improvements to treatments and ways to manage diabetes, but LGA supports a competitive pricing and underwriting approach to provide people living with diabetes affordable insurance rates.

Today, the team at LGA is leaning on its unique ability to blend underwriting and pricing with medical research. For example, vice president and chief medical director Dr. Edgar Fernandez and his team committed to researching diabetes to better understand its impact on long-term mortality, giving LGA the ability to offer standard plus rates as the baseline for diabetics. By lowering the premium prices, the carrier is opening doors to help protect more families and businesses.

Zooming out, by covering more people with diabetes, LGA in turn covers more historically under or uninsured groups. People from the racial and ethnic backgrounds that are most prone to adult-onset diabetes were also most likely to fall into the life insurance coverage gap. According to data reported by the American Diabetes Association in 2019, 14.5% of diagnosed adults were American Indian/Alaskan natives, 12.1% were non-Hispanic Black and 11.8% were of Hispanic descent. Factor in that 48% of Gen Z is non-white, according to Pew Research, tackling diabetes can close not only diagnosis gaps in coverage but racial and generational gaps as well.

“While not headline news, diabetes is an epidemic,” said Dr. Fernandez. “We want to provide appropriate coverage with pricing that makes sense for them as individuals, not a diagnosis. It’s a growing number of people and while it makes sense from a business perspective, we’re focused on the fact that it’s the right thing to do and helps close a glaring chasm that’s existed in our industry for years.”

Many carriers have set schedules for reviewing underwriting guidelines, some as infrequently as twice a year. But medical breakthroughs, developments and regulations are on no one’s timeline. LGA is prioritizing underwriting innovation to write more policies and expand the coverage offered to people, which is why it adopted a best practice of not updating on a set schedule but as developments in the medical and insurance communities come to fruition.

According to data reported by the American Diabetes Association in 2019, 14.5% of diagnosed adults were American Indian/Alaskan natives, 12.1% were non-Hispanic Black and 11.8% were of Hispanic descent.

“We keep up with the research and listening, but some of the best assets for evolving our underwriting standards come from our broker partners acting as eyes and ears,” Pugh said. “LGA is positioning itself to not only be nimble enough to react to changes but to proactively drive positive change as well.”

Inclusive life insurance requires simultaneous innovation, both in the underwriting standards and the technological accessibility of applications. Underwriters were pioneers driving digital change to speed up the entire application process for those looking at protecting their families. By introducing an online application process, more families can protect their loved ones. Since launching its digital experience, LGA has found that 90% of applications started online are actually completed.

With LGA, more than 75% of applicants can apply without an exam and approximately one-third of applicants even receive an instant decision.

The benefits expand to distribution partners and advisors as well. With the automated application process and digitization of more underwriting practices, they can devote more time to growing their client list, ultimately increasing their commissions. After all, the average time to get a policy commission was previously 40-50 days of work. That has been cut by more than half with LGA’s experience, seeing policies on average delivered in 15-20 days, making the digital experience one that’s not only convenient but efficient and effective toward bottom lines.

To ensure a seamless experience, advisors should set the right expectations with their clients. The LGA application provides clear steps on what the journey will entail for the clients and from there, the advisor can predict any information that may require a closer look. As carriers and advisors continue to collaborate and communicate clear underwriting requirements and appropriate disclosures on client details, life insurance gaps will continue to close.

“We are working across all channels to improve our lab-free/instant decision and bespoke-type products for distribution partners that make securing a policy as smooth as possible,” said Michelle Buswell, senior vice president and chief operating officer. “This comes not only in the form of our underwriting philosophy but also in how we approach our data, looking at and analyzing it in new, creative ways.”

When more lives are protected, more families and businesses can enjoy brighter tomorrows. Through constant digital innovation and inspired problem solving, LGA is thinking differently across the board, with underwriting helping lead the charge to a more inclusive approach to life insurance. That’s a future the entire industry can get behind.

Metric reported for full month July 2023. “Instant decision” is defined as total instant decisions as a percentage of total decisions from all business submitted through Horizon in July 2023.

Metrics reported YTD through July 2023. “Lab-free Decisions” is defined as total lab-free decisions as a percentage of total decisions from all business submitted through Horizon through July 2023. “Lab-free Decisions” percentage includes instant decisions. CN07262023-5