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Giving the Gift of Protection: Five Ways to Transform Your Underwriting Strategy for 2022

Gift giving long

Everyone loves a great gift giver: that one person who anticipates preferences, remembers birthdays and holidays, and delivers just the right thoughtful gesture at the right time.


Fewer people appreciate the amount of effort it can take to satisfy – and even delight – so many people, and why so many great gift givers … give up.

Insurance marketers confront a dilemma similar to that of the gift giver but on a much grander scale – and many are re-tooling their digital strategies in 2022 to embrace automated underwriting and appeal to rising customer expectations.

Research suggests this digitization drive can’t come soon enough. Despite record-high consumer interest in life insurance, the process of buying protection products continues to be off-putting for many who seek coverage – even during a pandemic. According to the 2021 LIMRA and Life Happens Insurance Barometer Study, more than 35% of consumers surveyed plan to purchase life insurance within the next 12 months, the highest numbers in the survey’s history; yet nearly half (47%) have delayed this purchase, and over a third (36%) believe they simply would not qualify for coverage. Life insurance, it seems, is viewed as intimidating.

RGA’s global research suggests today’s consumers expect an online, simplified life insurance buying experience, similar to what is now the case with almost all other purchases. Those insurers that demonstrate greater technical agility, increased consumer-centricity, more creative use of data, and greater cost efficiency will have the advantage. To that end, insurers must reassess underwriting processes and customer communications, but they must do so while competing for a contracting pool of talented underwriters. This has prompted many to embrace new digital underwriting strategies – particularly automated rules engines – to better prepare for the next generation of life insurance customers.

Winning insurers will replicate what great gift givers already get right: synthesizing data into insight and ultimately delivering that gift (or product) in the right package. Properly applied, automated underwriting can be transformative, a way to vastly improve the customer experience without sacrificing accuracy.

But to prepare for the challenges ahead, insurers would do well to keep several principles in mind:

  1. Automate to augment, not replace, underwriting talent.

    In North America, insurers will lose up to 16% of underwriters to retirement in the next five years, according to the 2020 Academy of Life Underwriters Census. These industry veterans will be leaving behind departments facing crushing caseloads, with fewer highly experienced mid-career underwriters. Many insurers are seeking to address this looming talent gap through automation. An automated rules engine such as RGA’s AURA NEXT can perform an initial risk assessment, delivering an immediate decision from almost anywhere: a home, kiosk, mobile device, or via an agent. When risks require additional underwriting, the platform forwards the case, already having been analyzed, to an underwriter, who then is free to focus on more complex conditions. Reinsurers such as RGA also offer turnkey solutions to support less experienced or oversubscribed staff underwriters with supplementary services.
  2. Seek underwriting technology that enhances the customer application and interview experience.

    It’s hard to imagine that filling out an insurance application can be enjoyable, but the global research and advisory firm Forrester Research1 suggests that “life insurers exploring automated life insurance underwriting engines should look for vendors that remove application friction with smarter underwriting.” In the digital age, automated decisioning at point of sale can improve perceptions, speed processing, and drive new business.
     
    It is important to remember, however, that the pistons of automated life insurance underwriting engines are their rules; they ensure the consistent application of an underwriting philosophy based on medical, occupational, lifestyle, and residential factors, among others. While new technologies may speed processing, effective automated underwriting still comes down to the quality of the data and the criteria used to evaluate that data in making decisions. More important, these technologies power the user-friendly experiences that are required to drive new business. 
  3. Forrester named RGA’s AURA NEXT product as a “Leader” in The Forrester Wave™ : Automated Life Insurance Underwriting Engines, Q2 2021 Systems report.

  4. Stay flexible.

    And yet, rules alone are no longer enough. Life insurers, advisors, and agents can add a customer – or lose one – based on the adaptability of an automated system to new information. Adaptable systems feature real-time reflexive questioning that adjusts based on responses and new inputs, greater accessibility in design and structure, and support for multiple languages and synonyms. Cloud-based software as a service (SaaS) installations, rather than those on-premise, are also key to reduce time to market and enable users to adjust and adapt rules to accommodate a rapidly evolving competitive landscape.

    For example, AURA NEXT accepts electronic data gathered by AURA’s different modules and applies underwriting rules that can be customized by company. It can draw from well-established sources such as MIB reports, prescription histories, and motor vehicle records or leading-edge credit-based behavioral data, digital health data, and other alternative evidences. RGA believes that for this reason Forrester named RGA’s AURA NEXT product as a “Leader” in the The Forrester Wave™: Automated Life Insurance Underwriting Engines, Q2 2021 Systems report. AURA NEXT received the highest possible scores in the automated decisioning: use of machine learning and AI criterion. As the Forrester report notes, “RGA’s AURA NEXT is a strong fit for life insurers who are cloud-comfortable and who view the underwriting engine as fundamental to the new business process.” (Forrester Wave™ Report, 2021
  5. Leverage data-based business intelligence.

    If nothing else, the COVID-19 pandemic illustrated the importance of data to assess risk as medical examinations and interviews became less feasible amid lockdowns and social distancing mandates. AURA NEXT not only automates underwriting; it enables users to continually monitor demographics, analyze trends, monitor decision frequency and quality, track new business, and more. Demand for such real-time data analytics, already high, shows no signs of slowing. In a recent Global Wellness Survey, RGA asked life and health insurers worldwide to identify how selling or underwriting changed amid the global health crisis, and 26 companies responded that they had reprioritized or launched initiatives to simplify and digitize processes. In the Asia-Pacific region, insurers emphasized automated underwriting and the contactless collection of biometric data. Similarly, European insurers emphasized virtual underwriting and medical apps. Latin America-based carriers reported a focus on e-underwriting and online policy quotations.

    This shift to digitization seems likely to persist long after the pandemic has ended. RGA, for example, conducted an eldercare survey and found that 51% of insurers reported relying on simplified underwriting to empower elders to age at home, and 21% saw future eldercare growth in the area of data and analytics.

Finding the right gift is no small feat, and great gift givers understand the principles of data-based research, dedication, and the right resources. Insurers mapping out an underwriting strategy for 2022 and beyond should assume a similar mindset. This starts with acknowledging the challenges ahead and identifying the right tools and strategies to meet the need. From there, a strong commitment to defined goals and the ability to adapt as necessary will determine success. Ultimately, the winners in the future of insurance will be those who, like great gift givers, keep the needs of others as a top priority. 

We welcome the opportunity to discuss how AURA can help evolve your processes to support digital transformation. Curious? Ask AURA.


References

1. The Forrester Wave™: Automated Life Insurance Underwriting Engines, Q2 2021: The Nine Providers That Matter Most And How They Stack Up, June 8, 2021

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