The underwriting of life and health insurance products is entering a transformational phase – one that, for now at least, is being driven more by advances in data, analytics and processing technology than advances in medicine. It is the digital transformation of business processing that will, at last, enable insurers to start transforming the customer’s underwriting journey to one as seamless as the digital apps that will be the primary engagement tools for the next generation of consumers.
RGA’s 2017 Global Life and Health Underwriting Survey findings demonstrate that for 25 leading life and health insurers from around the world, the practice of underwriting is being challenged not just to keep up with these advances, but to play a leading role in the transformation of business processes and the deployment of strategies to grow new business.
For this survey, conducted online from August to September 2017, underwriting leaders from large global, regional and single-market life and health insurance companies were queried about their priorities and challenges in this radically changing function. Survey participants provided their perspectives on the industry, the business environment and their organizational plans for the future.
We found underwriting leaders are currently thinking strategically about their business practices – particularly about the role of underwriting in today’s environment, and the importance of underwriting as part of the response to the persistent forces of increased competition, technological disruption and changing consumer expectations.
It is apparent that transformations in underwriting are actively accelerating across the globe. Even if the degree of formality differs by company and region, key aspects of change, such as predictive underwriting, electronic underwriting, assimilation of disruptors and segment-specific strategies, are being tackled by multinational and large insurers alike. The industry stands to benefit greatly from this transformation, and steps are being taken to capture that value now.
Looking ahead, priorities will shift and expand, and investments will be made that will create opportunities among various approaches. The time to test and learn, however, appears to be now, as insurers reported their investment dollars are already flowing in this direction.
RGA conducts global surveys on several industry topics to provide clients with tools to increase profitability, efficiency and effectiveness. We would like to thank the 25 life and health insurers for their time and effort responding to this survey. We hope you find the analysis and insights informative as you continue to refine your approach to this critical function.
The Timeframe for Transformation Is NowUnderwriting leaders globally were nearly unanimous in their assessment that there is a current perceived need in their organizations to change, with 96% indicating a significant or moderate need to improve performance overall. When asked what metrics they would be most focused on improving, top responses included: Policy Turnaround Time (83%); Improved Customer Experience (83%); and Efficiency (75%). Overall Underwriting Cost and Improved Risk Selection rounded out the top five priorities with 58% each.
Figure 1: Perceived Areas of Need to Improve Underwriting Performance
As illustrated in Figure 1 (above), given the overwhelming perceived need
to improve underwriting performance, it is not a surprise that 68% of underwriting leaders surveyed expect their organizations to make a significant or very significant investment in improving efficiency and effectiveness of current processes over the next three to five years (as noted in Figure 2).
Figure 2: Anticipated Expenditure on Underwriting
Improvements for the Next 3-5 Years
Survey findings revealed that change is already underway, with many respondents indicating they are either currently or intending to make significant investments in underwriting transformation. This transformation is occurring across five key dimensions, and survey responses indicated that now, more than ever, leadership across each is required to keep pace with the future strategies that hold promise to grow new business.
Figure 3: Five Dimensions of Underwriting Transformation
Dimension 1: Assimilation of DisruptorsIt is easy to forget that only relatively recently has talk of disruption within the life and health insurance industry gone mainstream. Amid much fanfare, tech players and new market entrants, backed by new disruptive technologies, are expected to reinvent the insurance model, which could displace established incumbents. Subtly, the focus of conversations appears to be changing, with established incumbents now thinking about how to assimilate disruptive innovations into their strategies to further their enterprises’ strategic growth objectives. The underwriting function is a key focus within this shift.
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