Group Medical Evidence of Insurability (EOI) Underwriting – Are We Staying Ahead of the Curve?
With benefit costs continuing to shift to employees, as well as growing interest on the part of employers in offering Voluntary products, the medical underwriting function and EOI underwriting decisions in particular have become integral protection components for managing group insurance.
Beyond the risk management value, operational costs are significant. For example, looking at all companies combined in our latest U.S. Group Medical Evidence of Insurability Underwriting Survey, about 1.5 million applications are processed per year. As supplemental benefits become increasingly important to employers as a recruitment and retention strategy, carriers must be prepared to keep up with rising EOI application volumes as enrollment in Voluntary benefits continues to grow.
Below are some key highlights from the survey that showcase underwriting staffing levels, tools and resources. Only the 21 participating companies received the full report.
A majority of survey participants (86%) reported that medical underwriters are solely responsible for medical EOI underwriting, with a small minority having responsibility for both medical and case underwriting – a result that is consistent with what we’ve seen in the marketplace. Where additional resource support is provided, it typically comes from managers and medical resources including physicians, nurses and physician assistants. On average, companies reported 1.2 physicians to 6.7 medical underwriters.
Meanwhile, 67% of participating companies said they offer a formal training program for EOI, all of which have been created and implemented by the participating companies. A few participants also mentioned on-the-job training and previous experience with medical underwriting as significant aspects of the training process. Overall, EOI training appears to fall short of training programs typically provided to teams of Individual Life or Disability case underwriters.
Underwriting Tools & Resources
The top challenge reported in our 2012 survey was technology deficiencies. However, the greater concern now, based on findings from our current survey, is how to manage volume during peak enrollment periods. Of course, these two concerns are related. With increased adoption of available technologies, improved operating efficiencies and the ability to handle spikes in application volume should be realized.
The use of straight-through processing (STP) is one way to achieve this. Two-thirds of participants shared that they now have this capability, with many having developed their EOI underwriting system in-house. Of those who have STP, 20% of their total applications on average were approved this way.
Despite progress with STP, only 32% of EOI applications were submitted online (a main requirement for STP). When it comes to processing time, the average is 14.5 business days, but it can vary widely by individual company. Growing adoption rates of existing technology should drive shorter turnaround times and also help underwriting teams handle spikes in production volume during the year.
To remain competitive in the Voluntary marketplace, insurance carriers will need to adequately invest in their EOI capability – from medical underwriting expertise to technology and tools. Finding the right business partners with solutions for streamlining data collection, analysis and underwriting decisions is an important way carriers can ensure they stay ahead of the curve.