What’s behind improved life insurance underwriting processes? - Report

What’s behind improved life insurance underwriting processes? – Report | Insurance Business America

Insurance News

What’s behind improved life insurance underwriting processes? – Report

Data used from 50 million respondents from 2018-2022

Insurance News

By
Althea Javellana

LexisNexis Risk Solutions has recently unveiled findings from its 2024 Life Insurance Mortality Risk Management Study. The research sheds light on how the combination of medical and non-medical data can greatly improve the process of evaluating life insurance applicants, leading to quicker and more accurate underwriting decisions.

The study, analyzing a massive data set from 50 million individuals over five years (2018-2022), uncovers that specific segments within traditionally high-risk populations, such as those with type 2 diabetes or asthma, exhibit mortality risks that are average or better than expected. This suggests they could be suitable for faster underwriting processes that bypass some of the more invasive and time-consuming health checks.

Enhanced segmentation allows for the identification of lower-risk individuals within high-risk categories, supporting accelerated underwriting.
Integration of data types—ranging from electronic medical records to driving histories and financial behaviour—helps insurers pinpoint lower-risk applicants more efficiently.
This integrated approach not only speeds up the application process but also cuts down on costs and enhances the experience for potential policyholders.

By using tools like the LexisNexis Risk Classifier, insurers can assess and categorise applicants’ mortality risks more effectively. The tool utilises both medical and lifestyle data to offer a nuanced view of an individual’s risk profile, bypassing the need for solely medical-based evaluations that can delay the underwriting process.

Incorporating these methods can lead to substantial benefits for life insurance companies. It streamlines procedures, reduces expenses, and provides a non-invasive application process that is quicker and potentially less daunting for applicants. The study highlights the possibility of broadening access to life insurance, particularly for underserved groups who might otherwise face barriers to obtaining coverage.

The study’s methodology is robust, covering over 1.7 billion medical claim lines, diagnoses, procedures, and specialty data, with mortality risks evaluated against the Standardized Mortality Ratio (SMR), adjusted for factors like gender, age, and smoking status.

What are your thoughts on these new developments in life insurance underwriting? Share your views below.