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Mortality is Still King in New Business Underwriting

Accelerated Underwriting made its debut roughly ten years ago in the US, largely due to the efforts of some very smart people at Deloitte who helped educate all of us on the power of predictive models, which had long been used in the P&C and Health insurance markets. While I was working on Principal’s program, I used to tell people that prior to my association with Deloitte, I couldn’t spell analytics!

In the ensuing ten years, the entire industry focused on chasing the dual Holy Grail Cups (worthy goals?) of a streamlined customer journey and reaching the underserved middle market. The result has been a sharp reduction in the number of blood profiles and the proliferation of new data sources; both greatly accelerated due to the Covid pandemic.

However, some carriers have seen the emergence of higher than anticipated mortality. Emerging data sources can certainly play a role in mitigating these impacts but not in every scenario. As much as you hate it…sometimes you just need to get medical records to ensure you can make an appropriate underwriting decision, or to monitor the impact of your relaxed underwriting standards.

But APSs take a long time to receive and a long time to read. So, what’s an underwriter to do? Are EMRs the solution?

Roughly eight years ago, I had the privilege of visiting Epic’s home office in Verona, Wisconsin. Largely due to the 2010 passage of the Affordable Care Act, EMR platforms were proliferating in the medical industry and the Life industry was just waking up to the possibilities of obtaining EMRs rather than traditional APSs. Despite the derision of many of my peers, I personally was a huge advocate for the Nirvana EMRs could offer: structured data, lower cost and instant retrieval.

Well….it’s taken a bit longer to get there, but the benefits are finally starting to materialize. Due to a substantial amount of effort from many in the industry, hit rates are increasing and special authorizations are gradually being whittled away. While it’s taken longer than I’d hoped, the future for EMRs is bright.

While the availability of EMRs continues to expand, underwriters will continue to live in a dual universe—using EMRs whenever possible but then pivoting to traditional APSs if necessary.

With so much change constantly bombarding our underwriters, how do we help them to navigate this parallel universe? In one word: technology.

Technology can help smooth out the warts we find in both EMRs and traditional APSs.

  • EMRs have a consistent format but contain a mix of both structured and unstructured data, and not all EMRs are accessible.

  • Traditional APSs have no structured data and no consistent format, but they’re universally available.

Technology can help us extract the key medical information, regardless of whether it’s from a traditional or electronic medical record. It then presents to underwriters exactly what is important to their decision and nothing more. Plus, if the carrier has a rules engine in place, technology can prepare the data to feed a rules engine. Think about it; we are actually reaching the point where simpler cases can be fully underwritten by a rules engine, even if the file includes medical records.

Underwriters play a key role in helping to improve the customer experience and cycle time, but their #1 job will always be to guard the mortality for the company because we need to make sure the company is financially sound and able to pay claims. Even with instant issue, customers won’t buy a policy if the price is too high. EMRs and APSs are—and will remain—an essential component of the underwriting process. However, thankfully, technology can assist the underwriter with reviewing the data and then applying their expertise to make the appropriate decision.

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