Life & Health leaders today are navigating through unprecedented change. At Gen Re, we strive to understand the specific business and operational challenges that concern them most – and provide solutions. We’ve found that direct dialogue is one of the best ways of achieving this, and a perfect example of this was the roundtable discussions we held at our recent Advisory Council client meeting.
A striking takeaway from these discussions is that new innovations are often a double-edged sword for L&H carriers, bringing both positive and negative impacts to navigate. They’re well aware of the potential efficiency gains available but want to introduce solutions cautiously, when the time is right. It’s a complex world for carriers and finding the right balance is critical.
Positive Trend – Accelerated Underwriting (AU) Adoption
We asked carriers how significant AU is to their business model and whether they expect to expand these programs in the near future. They told us that, in general, AU is an important and growing component of their companies’ overall underwriting process. AU programs are continually evolving to improve ease of doing business while maintaining appropriate risk management.
Changes have been focused in three main areas:
- New application questions
- New rules engines and/or underwriting workbenches
- New data sources, especially medical claims data and Electronic Health Records
Carriers are constantly monitoring their AU programs to achieve the right balance between efficiency and risks. Reviewing placement rates, sales impacts, and underwriting class mix is helping carriers fine tune their programs over time.
Negative Trend – Worsening Life Expectancies
As we emerge from the worst days of the COVID‑19 pandemic, mortality is still higher than pre-pandemic levels, driven by various emerging and complex factors. Accelerated underwriting, drug overdoses, and the worsening obesity epidemic were all cited as top-of-mind issues. Meanwhile, the industry continues to benefit from decades of historical medical advances with the hope that new breakthroughs could lead to continued long-term mortality improvements.
Insurers are looking to reinsurers for longer term mortality trend studies and data analytics and insights – and for help with predictive model development for underwriting risk classification and mortality prediction. Insurers are also looking for more insights around new and emerging data sources and their relative protective value.
Positive Trend – Artificial Intelligence Solutions
The use of Artificial Intelligence (AI) for underwriting is another hot topic, as predictive models become a growing part of the underwriting process. Automated rules are being replaced by new underwriting and mortality models. AI is also used for medical record summarization and better underwriting visualization tools, although such innovations are still in the early stages for most companies.
The increasing use of AI tools is placing new demands on underwriters. Roundtable participants highlighted the following challenges:
- Underwriters’ confidence in underwriting decisions with AI‑based solutions
- As AI and AU tools develop, traditional underwriter development paths may diminish and will need to be managed.
- Hiring must adapt to evolving role requirements; carriers should develop training for changing skillsets.
Negative Trend – Data and Regulation
In response to these new AI solutions, various state and federal insurance regulations are being proposed to ensure these tools are not creating adverse underwriting impacts for different races and ethnicities. Some regulations are focusing on the use of External Consumer Data & Information Sources (ECDIS) and requiring model testing to ensure these tools do not unfairly discriminate. A number of carriers have restricted or eliminated the use of ECDIS in order to more easily comply with such regulations.
It’s clear that the Life & Health market is a dynamic place to be right now, with many different inter-linked business and operational challenges for carriers to deal with as they look for profitable growth.
But thanks to the positive feedback loop Gen Re has established with the market, coupled with our own intellectual and financial resources, we’re confident we can help our clients navigate the future. One step we’ve taken is establishing several study groups to help clients navigate and address the issues in front of them.
Another way we’re helping all insurers is providing thought leadership, and one related item is happening tomorrow – Wednesday, May 22: Please join our next Gen Re Spotlights Webinar “Regulatory Updates – Use of AI and Potential Unfair Discrimination” (12:00 p.m. – 1:00 p.m. EDT) – this one is open for everyone to join – to hear our experts discuss emerging regulatory rules and the industry’s work in addressing regulators’ concerns. Register here if you haven’t yet signed up to get links to our series.
If you’d like assistance thinking through any of these topics, don’t hesitate to reach out.