The Post-COVID Era for Insurers – What’s on Our Clients’ Minds?
Gen Re executives are continually working with and listening to our clients to stay on top of industry advances to meet the ever-changing insurance environment. We do this through sponsored client events, industry-related meetings and one-on-one conversations. The last 17 months has certainly brought on a lot of change, some planned and some not planned. Below are some of the major topics that our U.S. life and health clients have been focused on recently – and question how best to move forward.
The implications of advances in Accelerated or Automated Underwriting (AU) have been a recurring theme. Carriers accept that they need to embrace AU to remain relevant, but at the same time they are somewhat worried about the risks involved in setting aside their tried and trusted tools.
Another concern is the long-term mortality impact of AU and COVID‑19. Now that AU is going mainstream, companies see a constant increase in limits, challenging their ability to balance product design, sales, customer experience, regulatory compliance, and mortality expectations.
Several other big picture challenges have emerged. The COVID‑19 lockdown accelerated the need to jump into the digital world. However, most companies admitted that they have struggled to evaluate and integrate new technology. The regulatory work required to onboard new IT added to the drag on their resources.
In terms of human resources, an underwriting talent gap seems to be appearing, whereby carriers see the need to recruit a new tech savvy generation of underwriters and also retain experienced incumbent staff.
Meanwhile, the traditional distribution network is aging but many sales still require face-to-face interaction. Introducing digital marketing and enrollment to agents isn’t always easy.
Economic constraints continue, and the continuing low interest rate environment is an obstacle to new product development. Companies see the need to find other types of products that are not so interest-rate sensitive, for example targeting the growing gig economy workforce.
Additional Pandemic-Related Observations
Companies made many changes to their underwriting criteria as a result of COVID‑19, and many of these alternative underwriting practices currently remain in place in some form. In practice, this means the desire for fewer Attending Physician Statements and the use of new data sources. Additionally we’ve heard:
- Companies that had launched e‑app programs relatively recently found the take‑up percentage increased dramatically from pre‑pandemic levels.
- While carriers are tracking mortality and morbidity for pricing, they are wary about changing assumptions and are watching for competitor moves.
- The loss of the “kitchen table sale” was one of the biggest hurdles to overcome with distribution. However, new underwriting data sources have helped.
- Retaining business was not a big issue, thanks to lapse moratoriums and regulated grace period extensions. Lapse and surrender experience were quite low over the past year, as consumers saw the value in the coverage that they have.
Using New Underwriting Tools
Electronic Health Records and Electronic Medical Records (EHR/EMR) are in the spotlight. However, there is a focus on data extraction as key to making use of EHR/EMR a reality because effective data feeds remain elusive. Tools built to assess and evaluate this type of data haven’t gained traction, however, because of continuing issues with capturing the information that is important to risk assessment.
Other talk around underwriting tools includes:
- Companies that are using medical claims data are seeing hit rates in excess of 50% and find it incredibly valuable to underwriting.
- There is an expected overlap between Rx, medical claims and data tools such as LabPiQture – and companies want to understand this overlap and streamline the ordering process.
- Carrier pilot programs that have been completed using LabPiQture and medical claims data have resulted in cost-benefit analyses that justify the use of both data products in underwriting processes.
Gen Re Services in Demand
When we’ve asked clients to look at the services Gen Re provides them and identify which they perceive as most valuable, Research & Development knowledge sharing is seen as vital, especially in the context of the many new data and underwriting tools now available. Companies have told us that they need help evaluating the cost/benefit of these tools and how and when to implement.
Carriers especially value the advice Gen Re provided on data sources, analytics, and medical research, along with behavioral economics in the context of accelerated/automated underwriting. Other Gen Re services that often rank highly among our clients include:
- Facultative services, capacity, access to underwriting and medical experts
- SOURCE Underwriting Manuals
- Underwriting and Claims training
Based on our client discussions this year, we have implemented two new initiatives:
- A carrier Steering Committee focusing on an upcoming "Individual Life Accelerated Underwriting Survey", which will include post-implementation issues and monitoring. (Our Research Center team will be releasing this questionnaire to carriers by early September. If your company would be interested in participating in our survey, please reach out to me.)
- A “Brown Bag” Webinar Series focusing on current industry hot topics. (Our next webinar takes place on August 12 at Noon (ET) on Behavioral Economics. Register here.)
I hope your company will benefit from these two initiatives. Carriers should be able to rely on trusted reinsurers to help them navigate the future.