Group Medical EOI - U.S. Benchmarking Survey Identifies Underwriting Challenges
In the fourth quarter of 2019, Gen Re released the results of our Group Medical Evidence of Insurability Underwriting Survey. The survey focused on how companies staff for and process their Evidence of Insurability (EOI) applications; it included Group Life, Long-Term Disability and Short-Term Disability products. The results provided participating companies with an opportunity to benchmark themselves against others in the industry.
For Group insurance, the medical underwriting function and EOI underwriting decisions are important protection elements for managing accounts. Beyond the risk management value, operational costs are significant. As benefit costs continue to shift to employees, employers are responding with supplemental benefits which has become an increasingly important recruitment and retention strategy. As such, carriers need to be prepared in order to keep up with the rising volume of EOI applications which the survey showed was on the rise.
Survey Results Overview
The 20 participating U.S. insurance companies received more than 2.3 million applications in 2018, up from 1.8 million and 1.5 million as was reported in our prior survey results.
> Underwriting Challenges
The three biggest challenges facing underwriting departments are unchanged since we first posed this question some years ago, and each challenge is interrelated:
- Managing volume during peak times
- Dealing with technology deficiencies
- Achieving expected turnaround times
> Automated Systems
Straight-through processing (STP) refers to a web-based EOI application where the insurance is either approved or declined by an automated system and does not require an underwriter’s review or anyone else to make that decision. Our survey found that 80% of the participating companies have an automated EOI system. Despite progress with STP, only about half (53%) of EOI applications are submitted online, one of the main requirements for STP. Additionally, of those using STP, an automatic decision was made on 54% of the applications, while 46% required an underwriter’s review.
There were many technology challenges mentioned - outdated systems, manual processes, coordination across multiple systems/platforms - to name a few.
Using technology should result in shorter turnaround times and help underwriting teams manage spikes in production volume during the year. However, if companies don’t invest in upgrading their systems and in streamlining their underwriting processes, managing sudden volume increases will be difficult to accomplish.
> Processing Time
Our survey results showed that 11 business days is the average processing time for Group Medical EOI applications which is slightly lower than the average of 13 business days reported in the previous 2018 survey. The average processing time varies widely by company and ranged from 3 to 20 business days.
For insurance carriers to successfully compete in the supplemental benefit marketplace, they need to adequately invest in EOI capabilities - from medical underwriting expertise to technology and tools. They can find help by selecting good business partners with solutions for streamlining data collection, as well as analysis and underwriting decisions - ensuring they can take advantage of technological advances and other support to sharpen their competitive edge.
If you’d like to read more about our 2019 survey results, you can see more highlights in our summary publication.