By Carolyn McAvinn, FLMI, AALU, PMC-IVJanuary 6, 2022
If you have ever worked in a Life, Disability or LTC production underwriting operation, you know that it is a highly competitive environment and that four key components drive sales and application activity:
As underwriters, we have little influence on decisions regarding product features or agent compensation. We do, however, have the ability to influence price and can have a significant impact on service. Indirectly, we are able to influence the ultimate price of a policy through the assessments we make as we evaluate an applicant’s risk profile and determine their underwriting classification. In addition, throughout the cycle of the application, we can have a direct and significant impact on service as a result of the data we choose to order to assess that risk.
One may argue that leaders at higher levels dictate the required data sets. While that may be true, I contend that the underwriter performing the initial review of the application has the ability to impact service levels and significantly improve the speed of decision-making based on their ability and willingness to embrace the use of electronic medical data.
At MIB, we carefully watch and measure the cycle time metrics of electronic medical data. Our measurements capture the time between record request initiation and the time a record becomes available. The chart below captures the aggregate cycle time that our members experienced on average during 2021:
What once was a multi-day process has improved significantly, and electronic medical data is now available very quickly – usually the same day it is requested. If we couple the volume of medical records released electronically with the improvements in decisional capabilities that our members are reporting, the positive impact on service levels is compelling. “Sufficiency rate” is a measurement used to assess when an underwriting decision is possible without the need for additional underwriting requirements, often defined as the need for an APS (Attending Physician Statement). Other members measure their sufficiency rate as the ability to make an underwriting decision using an electronic medical record in combination with complementary data such as prescription records (RX) or clinical laboratory data. No matter how they define it, those tracking this metric are seeing positive results when they use electronic medical data as part of their underwriting process.
In a recent review of three live case scenarios from one of our members, we made the following cycle time observations:
Case #1: A difference of 32 days between when the electronic medical data was received vs when the traditional APS was available, with no difference in the data received.
Case #2: A difference of 15 days between when the electronic medical data was received vs when the traditional APS was available, again with no material difference in the data received. In fact, the electronic medical data contained more recent information than the traditional APS did.
Case 3#: A difference of 13 days between when the electronic medical data was received vs
when the traditional APS was available, with no material difference in the data received.
While this gap may not seem significant for a handful of cases, it could have a material impact to an organization’s overall cycle time measurements, minimizing potential reputational risk for slow service, and resulting in notable improvements in client satisfaction.
If we revisit the four components that drive sales and application activity, it is critical to be at the front of the service game when competing with peer companies that offer similar products with comparable pricing and compensation structures. The longer it takes to integrate electronic medical data into your workflow, the less efficient your processes become and your turnaround times will continue to see unnecessary delays - increasing the risk of driving sales directly into the hands of your competition. If you use electronic medical data but still feel the need for the security of confirmatory data in the form of more familiar - but more expensive -traditional underwriting requirements, you are not reaping the benefits that electronic data provides, nor differentiating yourself in the market. The long-term result may be that the more favorable risks, along with higher placement rates, go to the competitors that take the necessary steps to improve their service through electronic medical data retrieval and sufficiency rate improvements.
MIB is here to help navigate conversations about electronic health data and expound the benefits of weaving it into your workflows at your pace. Contact us for more information
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.