Replacing Lost Data for Accelerated Underwriting of Life Insurance Applications
One of the hardest challenges Life insurers encounter when adopting accelerated underwriting (AU) is figuring out how to compensate for the loss of information previously derived from blood and urine tests.
It’s been the case that insurance exams and fluid specimens reveal important evidence for the risk assessment of life insurance applications. But “fluidless” underwriting gives up this value - and insurance carriers feel the need to offset the loss.
That’s what drove us to take a closer look at LabPiQture, a relatively new tool that reports clinical lab results in the extensive data of Quest Diagnostics and LabCorp. We chose to explore how effective LabPiQture is as a substitute for insurance fluid tests.
The analysis involved de‑identified clinical laboratory tests between 2012 and 2019 of nearly 100,000 life insurance applicants maintained by ExamOne, a Quest Diagnostics company.
We determined that a subset of LabPiQture data includes some standard insurance laboratory tests for nearly 30% of our sample applicants. Of those applicants with insurance tests, we identified adverse information among 15%. This underwriting value varied by age and gender but had a significant mortality impact for all age and gender combinations.
The impact would be affected by your underwriting approach and the tools you used in addition to LabPiQture. It’s therefore important to calibrate the impact on a significant sample of your business. Gen Re is happy to provide insights from our work in this area.
Our investigation also showed that LabPiQture reports other information that can help underwriters assess the risk of life insurance applicants. These include:
- Insight from clinical tests that insurers do not typically require
- Analysis of sequential laboratory test values over time
- Ratings based on specialties visited and/or ICD diagnoses codes
- Limited preferred-class assessment with lipid tests
We intend to research some of these other uses in another study at a later date.
In the meantime, it’s encouraging to see that in an AU environment, LabPiQture really can replace some of the evidence lost by the elimination of fluids tests, even though the substitution is not one‑for‑one.
Value of LabPiQture
In light of these preliminary findings, Gen Re recognizes the potential value in the use of LabPiQture in the following areas:
- In underwriting, such as during COVID‑19, when traditional requirements may not be available
- As an enhancement to existing AU programs to offset some mortality slippage associated with such programs, as well as to improve time service for a larger segment of business
- As a tool in companies’ full underwriting requirements
Naturally, LabPiQture’s value will vary among insurance carriers. However, a cost-benefit analysis joining our mortality results with the specific age/gender/face amount distribution of the insurer’s portfolio will determine its utility for each company and clarify the threshold to maximize the benefits for that insurer.
The global pandemic has only added to Life insurers’ need for actionable responses to existing underwriting challenges. We’re confident that the typical insurance lab test results contained in LabPiQture provide material mortality value and can replace some of the evidence lost by the elimination of fluid tests.
To learn more about how best to incorporate LabPiQture into your Life underwriting workflow and improve your business results, you can read our white paper - or get in touch with one of us to discuss how it could benefit your company.