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The quest to make the insurance process simpler, faster, and cheaper is nothing new. When I started as an underwriter in the 80s, we relied on M.D. exams, treadmill EKGs, lab results, even chest x-rays to evaluate applicant risk.
As the years passed, expensive and time-consuming evidence gathering gave way to more streamlined medical information, such as paramedical exams instead of M.D. visits, and eventually incorporated new sources of evidence, such as prescription drug reports. Along with increased efficiency came an industry-wide recognition that risk selection and competitive pricing could not be advanced at the expense of mortality soundness.
We often refer to this history of gradual improvements as the “evolution” of the industry, and I think that term accurately describes the progress we have made – until now. Today, “transformation” better describes the fundamental shift taking place in insurance. The driving force: aligning protection products with the individual customer journey in an era of advanced technology and higher consumer expectations.
The demand for targeted and tailored insurance solutions is fueling an unprecedented convergence of products and services. New technologies, access to new forms of data, and increased ability to analyze that data to evaluate risk are providing the tools to make this convergence possible. Siloed product lines and processes are becoming obsolete. From application and underwriting through policy issue and claims management, carriers are assembling multi-factorial services along the value chain to reach uninsured and underinsured populations like never before. (RGAX was launched to help facilitate this process.) Accelerated underwriting, digital distribution, and other game-changing advances are coming together to fundamentally transform the way insurance is bought and sold.
While no one has a crystal ball for the next five years, ten years, or beyond, to predict exactly when this transformation will fully take place, we can already see where the industry is headed. We also know that getting there will not be easy.
The central challenge: striving for the new tomorrow we see on the horizon while maintaining commercial viability and mortality soundness today. It requires patience alongside innovation. Not everything will work, so insurers need to acknowledge this and be prepared to learn from their missteps – setbacks are an essential part of moving forward. The goal should be long-term profitability rather than immediate gains. Life insurance comes with long-tail risk – 20-30 years or more – so chasing the latest “shiny object” without a clear idea for how it fits into a larger strategic plan can lead insurers astray.
This brings us to the paradox of choice. Carriers have too many choices, from insurtech startups to risk assessment tools. So, how to choose? In evaluating potential paths, fear of missing out and the pressure to do something can distract companies from sticking to core strategies. The road to innovation is littered with the wreckage of overhyped enterprises and solutions. Focus is key, as is finding the right partners.
Consider regulations, for example: Many startups entering the insurance space simply do not understand the regulatory environment – fair credit, privacy, confidentiality, etc. The risks of working with such a partner in personalizing insurance offerings are clear. On the other hand, also clear are the benefits to be gained by finding the right partners in innovation and developing sustainable, mutually beneficial relationships in pursuit of common goals.
Bottom line: In the midst of an industry transformation, wisely choosing what to pursue, how and when to pursue it, and with whom is the essential dilemma – and opportunity – facing insurers today.
At RGA, we eagerly pursue innovation, but we do so from a position informed by decades of experience and more than $3 trillion of life reinsurance in force to validate our opinions. When we take a risk on promising pilot programs and product testing, it is informed risk. In other words, we do all we can to choose wisely – with new tools, products, and partners.
RGA focuses on doing innovation right rather than doing it quickly – all the while working relentlessly to maintain and improve current services and standards our clients rely on. We want to be the long-term industry leader, and that means taking the time to truly understand the problems we are trying to solve.
RGA’s RiskDimensions portfolio of risk assessment solutions offers a good example of how this works. RiskDimensions provides a consistent, compatible set of tools that, when used in combination, deliver even more powerful results. A new predictive model using prescription data, for example, has proven to enhance the predictive power of TransUnion TrueRisk® Life, a credit-based insurance score validated by RGA.
All tools within the RiskDimensions platform were developed over periods of years, through various mutually beneficial partnerships, and with a goal of long-term sustainability. As a result, the tools are thoroughly researched and tested, are actuarially credible, and can individually pass regulatory scrutiny.
The journey to create our Digital Health Data scoring tool, a key component to the RiskDimensions toolset, illustrates RGA’s pioneering yet measured approach.
Nearly a decade ago, digital giants like Google and Amazon began to explore consumer health data, and we grew very concerned about the sourcing of such data and the likelihood of antiselection, fraud, and misrepresentation through omission. Yet we also saw an opportunity for using electronic health records (EHR) to improve the insurance process. While the industry was being flooded by a confusing array of EHR ventures, RGA spent years collecting data and developing industry-leading expertise around EHR, conceiving and testing risk scoring models, and waiting until the market was ready for a commercially viable EHR scoring solution.
That time has arrived. RGA’s Digital Health Data scoring tool aggregates EHR data and translates it into actionable information for risk assessment. In May 2019, RGA and partner MIB Group Inc., the insurance industry’s leading data resource, announced the launch of an EHR underwriting solution. By combining MIB’s data network and RGA’s Digital Health Data scoring, carriers benefit from the synergies of a new data source and a powerful risk assessment tool for use in underwriting.
The transformation of the insurance industry has begun. RiskDimensions and its Digital Health Data scoring tool, along with the other complementary solutions in the RiskDimesions toolset, are part of that process. Industry leaders emerging on the other side of the transformation will be those who choose to do things right rather than do things quickly – but the time to map out a plan is right now.
Contact RGA to learn more about RiskDimensions and how you can use this risk assessment toolset to build your business.
