New RGA research shows that achieving maximum benefit from digital underwriting evidence (DUE) does not always require applying all types of DUE. Scenarios exist where cutting DUE costs dramatically results in only small decreases in mortality protection.
Dig deeper: Read Part I and Part II of this three-part series
As the 2002 Major League Baseball season approached, the Oakland A’s faced a shoestring budget and slim playoff hopes. Their response fundamentally changed the game — and offers a lesson insurers can apply to digital underwriting evidence (DUE).
As depicted in the book and movie Moneyball, the A’s shifted focus from costly superstars excelling in traditional metrics such as home runs to players who delivered value through a different lens: on-base percentage. The result? They maintained competitive performance while dramatically reducing costs — winning 103 games and setting an American League record with 20 consecutive victories.
The takeaway: Success does not always require the most expensive options to achieve strong outcomes.
Life insurance underwriting is experiencing its own Moneyball moment. Three forms of DUE — LabPiQture (LP), medical claims (MC), and electronic health records (EHR) — offer innovative ways to assess risk with precision and efficiency. Importantly, DUE is not an undervalued player; it is a proven contributor that can deliver cost savings compared to traditional, tried-and-true underwriting requirements without sacrificing meaningful mortality protection.1
RGA research shows that optimizing the mix of DUE can significantly reduce costs while maintaining strong risk assessment. In other words, insurers can strategically select evidence, lower expenses, and still achieve winning results.
This paper explores the interplay among DUE sources and the art of optimization, testing two hypotheses:
Like Moneyball, the key is to find the sweet spot — where efficiency meets effectiveness and smart choices drive better outcomes.
RGA reviewed approximately 1,000 historically underwritten life insurance applications from a carrier partner. After ordering all three DUE types, RGA underwriters conducted assessments using foundational evidence (application, prescription history, MVR, MIB) alone or with various combinations of DUE. Cases were excluded if:
The study included 567 cases.
For demonstration purposes, the cost of acquiring DUE was calculated using assumed costs. Cost of evidence likely is not uniform for every carrier. The study makes assumptions as to these costs to develop illustrative examples. This analysis assumes that MC and LP have a very similar cost (less than $30) and that EHR is approximately double the cost of MC or LP. Non-evidence specific underwriting expenses (e.g. underwriter time) were not considered as DUE cost.
Mortality savings, the presumed benefit of using DUE, were calculated using a method detailed in RGA’s previous publication.2 Briefly, they are determined by applying a set of mortality relative risks (RRs) to all decisions and calculating the average RR of foundational-plus-DUE compared to foundational-only decisions; this ratio indicates the change in expected mortality, and 1-1/(ratio) provides the mortality saving.
The mortality saving is recalculated after excluding DUE-decline cases to reflect a more conservative estimate, resulting in a range of potential savings. For instance, with all three DUE, the mortality saving ranges from 9.6%-22.9%, where 9.6% represents the scenario excluding DUE declines.
Out of 567 study cases, 504 (89%) present with MC, 219 (39%) with LP, and 185 (33%) with EHR. Based on the assumed cost for each DUE, the total cost for all three DUEs is $26,668.
A comprehensive review of all underwriting decisions demonstrates that if any DUE decision results in a "decline," subsequent DUE assessments do not alter the outcome. This finding supports the implementation of the first rule:
However, the degree of DUE savings is influenced by the order in which DUE considerations are made. Table 1 presents six possible sequences of DUE evaluations, along with the number of potentially unnecessary DUEs and associated cost savings. While the mortality benefit remains consistent across all six sequences – 9.6%-22.9% — the #6 sequence, with EHR first followed by MC and LP, generates the highest saving.
DUE optimization aims to avoid unnecessary DUE requirements in order to reduce associated costs when the probability of additional benefits from these DUEs is relatively low. The following two additional rules are provided as examples to illustrate this approach.
Applying these three rules to a sequence of six DUE scenarios, Table 2 presents the resulting DUE cost savings and their mortality impacts. The results show minimal decreases in mortality benefit across all six scenarios from the maximum mortality benefit, which is 9.6%-22.9%. Sequence 1 achieves the highest DUE cost saving, amounting to $3,820 (14% of the total $26,668).
The analysis supports two hypotheses:
When there is no compromise on mortality benefit, DUE sequences 2 and 6, both of which position LP last, demonstrate greater DUE savings (Table 1). This outcome arises because LP is less likely to result in a "decline" decision, yielding minimal advantage in ordering it earlier.
Conversely, when some degree of mortality compromise is permitted, DUE sequences 1 and 3, both placing EHR last, achieve higher DUE savings (Table 2). This is attributable to the fact that deferring more costly DUE options later in the sequence has a more substantial effect on overall optimization. In fact, the cost savings in these sequences may be even greater due to MC and LP supporting a higher degree of automation than EHR.
This study demonstrates that applying three basic rules can improve the use of DUE. The findings suggest that DUE may be further optimized through more detailed rules, which specify the effectiveness of different types of DUE under varying conditions.
The study illustrates the potential of DUE optimization. The results are not intended to be universally applicable or indicative of any particular carrier. The true cost of DUE may vary by carrier. Variations in underwriting programs, business practices, marketing strategies, distribution channels, and evidence pricing across carriers can affect outcomes, leading to differences in DUE mortality savings and optimization opportunities.
Nevertheless, the findings suggest that – much like the Oakland A’s learned to optimize their budget around on-base percentage and undervalued players – carriers should consider establishing business rules to optimize the DUE ordering sequence, thereby maximizing DUE savings while minimizing mortality impact.
RGA is committed to providing support in this process. Contact us today to explore how to apply these rules to your business.
