By Carolyn McAvinn, FLMI, AALU, PMC-IVAugust 29, 2022
As access to digital data becomes more readily available, we continue to see new emerging vendor entrants promoting various new data solutions, flooding the marketplace with options. With so many choices to consider, many of our members are still exploring and measuring the value and benefits of these different types of digital data offerings. The list of underwriting tools considered by each member vary slightly, but most include combinations of the following: (1) MIB Code Solutions (2) electronic medical records (3) identification verification (4) driving violation indicators or records (5) prescription histories (6) various forms of abbreviated medical information (billing, claim, laboratory and diagnosis data) and/or (7) mortality scores.
While having choices can be a good thing, too much data can undermine efficiencies and lead to unnecessary delays. When working to improve the customer experience and minimize underwriting costs, leveraging an electronic health record up front in your process with additional information as needed may be the better approach.
Consider the following two questions:
1) From a customer experience perspective, is the customer penalized if you do not embrace an electronic health record solution? Consider the impact on the customer’s time in the traditional process:
Instead, let the data with the most potential to satisfy the risk assessment content requirement do the work! The electronic medical record is the one item with the potential to deliver information about medication use, lab results, symptoms, diagnosis, referrals, clinical notes, etc. The goal should be to make the application process as easy as possible for the customer. Engage with them as infrequently as possible during the underwriting process since each extra touchpoint is an opportunity for the customer to reconsider the purchase or to walk away altogether.
2) Just as life insurance doesn’t have one-size-fits- all products, shouldn’t we toss out the antiquated age/amount requirement grids and bring the premium structure into the equation? Why spend more to assess risk than required?
If you have attended an underwriting conference within the last twelve months, chances are that you heard conversations about similar concepts. For younger ages and lower death benefit amounts, considerations are underway to look at pulling cheaper data initially and only securing additional and/or more expensive requirements as they are deemed necessary. What will emerge in the next 12-18 months, may look more like a process of hurdle jumping for requirements, or even a pass/fail approach.
Financially, this approach makes a lot of sense, but it still presents some potential efficiency and risk tolerance gaps, especially if the data sources used up front are insufficient. Underwriters, or engines, will still need to review and interpret the results and provide a decision or pivot to additional requirement(s).
Electronic health records represent the one requirement that has the potential to provide holistic insights up front and are the ideal starting place to maximize efficiency. Rapidly improving in terms of release rates and content depth, by ordering electronic health records at the front of the line, carriers can identify if there is sufficient information to determine insurability and price the risk with a single (or limited) medical requirement(s). The odds are increasing that prescription history information, laboratory results, and a synopsis of the health history and functional status of your customer will be available in one place…the electronic health record. Again, let the digital medical data do the work!
*Digital Data Cost Averages/ Estimates:
If we use the 10-year term product example, with a $228 annual premium and some of the ‘typical’ digital medical requirements* being used today, the cost could be upwards of $80, representing 37% of the first annual premium for cost of the medical requirements alone. If the initial medical requirement is limited to an electronic medical record, that cost could be significantly reduced to ~ $35, providing a more comprehensive view of client-specific data and a cost containment of only 15% of the first-year premium.
Given the factors discussed above - the ease and immediacy of obtaining robust data for the cost - it seems clear that starting the underwriting process with a request for electronic medical records is the better approach to maximize efficiencies and deliver the best customer experience possible.
MIB continues to gather metrics related to our electronic health record offering and we are available to help guide discussions about this evolving landscape with leaders or your production users to share our learnings. Please reach out to us and let us help guide your medical digital data journey.
Carolyn McAvinn is the Director of Underwriting Innovations for MIB. Prior to joining MIB in late 2018, she held various underwriting roles supporting multiple companies, product lines and distribution platforms. These included underwriting management, direct line production underwriting in the life, disability and long-term care markets and assisting with the development of underwriting engine automation and accelerated underwriting programs. Carolyn is a graduate of the University of Massachusetts - Amherst and currently serves as a board member of the MUD (Metropolitan Underwriting Discussion) Group in NYC.