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  • May 2019
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More than Skin Deep: Automated Underwriting and the Customer Purchasing Process

Innovation and design for mobile device blue print
In Brief

Insurers seem to be chasing appearances, but sleek, web-based systems can mask a distressing reality: Underwriting technology underpinning the decision process is not attracting the same attention. RGA's Bruce Bosco calls for a greater emphasis on automated underwriting. Askaura@rgare.com to learn more about  AURA (Automated Underwriting and Risk Analysis) and automated underwriting.


The challenge: improving the buying experience without sacrificing underwriting accuracy. Some have turned to tech pioneers such as Apple and Google for inspiration – but may be drawing exactly the wrong lessons.

The instinct is understandable: Before Apple, information technology was the intimidating province of a few specialized scientists. Then, with the creation of the first attractive, user-friendly PC, Apple co-founders Steve Jobs and Steve Wozniak made computing possible for the rest of us.

Insurance is intimidating, too. According to New York Life’s 2018 Life Insurance Gap Survey, only 10% of U.S. millennials have enough life insurance to cover self-reported needs should they pass away unexpectedly. And the coverage shortfall extends far beyond the younger, tech-savvy groups. According to LIMRA’s 2018 Insurance Barometer Study, one in five people who already have life insurance say they do not have enough.

What’s fueling this persistent protection gap? Possible culprits include sluggish, often paper-based application processes and intrusive requirements such as blood samples and physical exams. In an increasingly data-driven society, potential policyholders expect to buy insurance with a click, not a needle stick.

Fortunately, the automated, or e-underwriting, rules engine helps answer this challenge. E-underwriting has transformed the new business underwriting process – and the technology continues to evolve and adapt. Yet, far too many carriers make the fatal mistake of misjudging modern e-underwriting capabilities. Automated underwriting is often considered just another form back-end software rather than a key means to improve the customer experience. It is time to make sure we effectively deliver on what our slick new user interfaces are promising consumers.

Beauty Isn’t Everything

Insurers are seeking to echo the elegant, accessible web and application design commercialized by firms such as Apple to help attract and guide customers through the life insurance application and buying process. Perhaps like no other modern entrepreneur, Apple CEO Steve Jobs was obsessed with beauty, and Apple’s engineers came to expect a brutal rejection of “good enough” – Apple’s products had to be “insanely great.” Less discussed is the uncomfortable fact that function mattered as much as form to Jobs, and designers from the iPhone to the Mac were often sent back to the drawing board when the resulting product did not perform as promised.

What our industry is realizing is that how you sell is just as important as what you sell. Many carriers seem to be applying only part of this lesson, concerned primarily with the niceties of digital design, from user interface (UI) to user experience (UX). Too many fail to extend available e-underwriting technological capabilities to enhance the underwriting decision process. New business (application) and underwriting processes are intricately intertwined, after all. To ignore one at the expense of the other risks failure of the whole. Only consider where the real exposure lies for an insurer: not in the digital front-end of the process but during the underwriting, or risk analysis, phase.

Alarmingly, insurers seem to be chasing appearances, investing eye-watering sums of money into UI/UX projects to improve the application process, from streamlined websites to gamification and mobile applications. But beauty is often only skin deep. These sleek, web-based applications can mask a distressing reality: Underwriting technology underpinning the decision process is not attracting the same attention. An RGA Global Claims Technology survey of 107 large insurers from around the world revealed that only 40% of companies have integrated or upgraded automated underwriting processes to support gleaming new apps and interfaces.

The result is predictable. An attractive design cannot disguise inadequate underwriting processes, and many carriers in the same survey shared concerns that their underwriting processes were inefficient. Too many insurers are having to decline risks simply because they do not have enough analysis to accept. Carriers must ask themselves: Are we utilizing all available technology and evidence sources to confidently qualify as many risks as we should? As Jobs would say, “We don’t get a chance to do that many things, so everything should be really excellent.”

All Underwriting Automation is Not Alike

Of course, selling life insurance today requires more than fast decisions; it requires the right decision, fast. In the race to digitize, carriers must take care to avoid the trap of simply writing more bad business faster.

For example, data-driven decisions combining various evidence sources into decisioning and an overall analysis is one way to make that happen. Life insurers can now access a growing wealth of applicant data – from credit behavior and driving records to prescription histories. Combined with traditional medical information, these non-traditional data sources can create a more complete picture of the applicant’s long-term mortality risk.

Yet business processes are only as good as their weakest link. Multivariate rules analysis in underwriting may enable more thorough risk assessment, but accelerating the underwriting process also requires that analysis to be supported by the right technology.

AURA (Automated Underwriting and Risk Analysis) provides an industry-leading example. AURA is a SaaS (software as a service) based global decision management platform fueled by the underwriting expertise of RGA. The platform combines multivariate/non-traditional, data-driven evidence to speed risk analysis, help the carrier avoid invasive and time-consuming medical tests and fluid draws on qualifying applicants, and still deliver individualized underwriting decisions.

The future of underwriting lies in managing increasing amounts of data from diverse sources, with multiple decision points and factors, to arrive at an accurate, comprehensive decision as unique as the individual being underwritten. This requires relying on the right automated or e-underwriting solutions, backed by robust and proven underwriting rules. In other words, it requires carriers to develop underwriting automation quality alongside visually appealing online applications.

Insurers can no longer afford to have underwriting processes that are just okay; they must be, in the words of Jobs, “insanely great.” Almost two decades ago, AURA helped establish the automated underwriting solution market. After many software companies have entered and exited this space, AURA remains an industry leader. To learn more about e-underwriting considerations and how AURA can help grow your business, contact us.

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Meet the Authors & Experts

Bruce Bosco
Bruce Bosco
Vice President, Business Development, AURA Technologies

Additional Resources

This article originally appeared on ThinkAdvisor Life/Health (www.thinkadvisor.com).