“…Changes Aren’t Permanent, But Change Is.”
—RUSH, Tom Sawyer
To say that 2020 was a year of surprises is a vast understatement. Yet, the challenges presented in the past year served to accelerate underlying changes that were already at work aimed at improving the customer and producer experience. At American National we are committed to keeping the same sense of urgency as we march forward in 2021 and beyond.
For decades, the life insurance purchase and underwriting process seemed to be essentially stable and unchanged. Paper applications, traditional age/amount underwriting requirements, for-cause attending physician statement requests were the norm. However, in the past few years it has become clear that the only norm is change itself. With the advent of accelerated underwriting, it became possible for individuals to obtain coverage without traditional exams and labs. E-applications made the submission process more effective and automation has enhanced the process even further with system-generated underwriting decisions on clean cases.
American National entered the accelerated underwriting process quite early. In 2011 we launched our Underwriting Xpress program which made a non-medically examined process possible for modest amounts of coverage. In 2017, we launched Xpress Plus, an expansion of our accelerated underwriting program making the purchase of coverage up to $1 million possible without a traditional medical exam. These programs, combined with our e-application system (Expert App) and our internal underwriting engine (Smart Underwriting), have vastly improved the life insurance purchasing process often resulting in same-day approval of cases up to $1 million in face amount.
Prior to the COVID-19 pandemic, American National was at work with various pilots to find acceptable alternative underwriting data to enhance our acceleration and automation process. With paramedical exams becoming difficult to obtain, the pandemic spurred the need to put these new sources of data to work in production. At the same time, COVID-19 presented us with a new mortality challenge. How would it be possible to both enhance our accelerated underwriting process to keep the business running smoothly and mitigate the risks presented by the virus? We approached this problem in two ways: For those who were younger and lower risk, we began utilizing alternative sources of data (medical claims data, electronic health records, clinical lab results, for example) which resulted in an increase in our acceleration rate for ages up to 50. At the same time, we limited our exposure to those at higher risk, especially those at older ages. The net result was an overall reduction in time to approve/issue life insurance coverage.
Serving as a complement to our Xpress and Xpress Plus acceleration programs is our automated underwriting process, Smart Underwriting. Underwriting automation has been at the forefront of our focus for the past few years. Our team of dedicated professionals developed a system that not only underwrites clean cases, but also processes substandard business up to Table Six. Most of the decisions made by our Smart Underwriting engine are made within 30 minutes of submission on all products with face amounts up to $1 million. In 2021 our focus will be on increasing the number of cases handled by this system and on enhancing our approval notification process.
The use of alternative medical data can also reduce dependence on the traditional Attending Physician Statement (APS). The APS is often the main culprit of delays in the underwriting process and retrieval of the information is frequently out of the control of the carrier or agency. In 2021 we will be utilizing data such as Electronic Health Records (EHR), medical claims data, and clinical lab information in lieu of the traditional APS when possible. While meaningful hit rates are currently low, they are on the rise and there are many opportunities to obtain sufficient information in real time (or near real time) that will allow us to forgo the traditional APS.
The urgent response to the COVID-19 pandemic has enhanced our understanding of alternative data and its potential uses. In 2021, we will continue to utilize these newer data sources and further imbed them within our processes. At the same time, we will continue to pilot other alternative tools as we seek ways to improve the process. The challenge in finding alternatives to traditional underwriting requirements is that no other data product provides consistently the same set of valuable measurements as the paramedical exam and insurance labs. With alternative electronic information, each person will have different sets of data making it somewhat akin to Forrest Gump’s box of chocolates. You never know what you will find. Some will have comprehensive information and others may be scant or non-existent and others somewhere in between. Because of this, the traditional exam and labs are not going away. These requirements will continue to be a necessary part of the underwriting process to keep products priced competitively, especially with certain risks and at larger face amounts. American National works closely with our exam vendors to make sure that the paramedical process is done safely and professionally. Also, as a value-added, our clients can also receive a text message when their lab results have been completed. The results can the be reviewed electronically by the client. We believe this is an excellent way to partner with our clients in the best interest of their health. Understanding lab results may help guide important lifestyle changes and enhance long-term well being.
While the focus of most discussion involving underwriting revolves around automation, acceleration, predictive analytics, etc., the art of underwriting and the importance of critical thinking will always be key. Our Precision Underwriting credit program illustrates our focus on underwriting the whole person with the understanding that not all risks can be constrained to “by the book” underwriting rules. Our credit program applies to individuals medically underwritten between ages of 18-60 and face amounts up to $5 million. All products are included in this program. The purpose of Precision Underwriting is to find those individuals who separate themselves from others by displaying various positive characteristics enabling us to make intelligently aggressive underwriting offers to these applicants.
In addition to enhancing our automation program, using alternative sources for traditional APS’s, and emphasizing our Precision Credit Underwriting program, several other changes are occurring in 2021 to make our underwriting more competitive. These changes include:
- Liberalized Aviation Guidelines
- Expanded Foreign Resident Guidelines
- More Competitive Financial Underwriting Guidelines
At American National we pride ourselves on our culture that promotes agility, collaboration, and engagement. The challenges of 2020 put on display each of those cultural characteristics. As we march through 2021 and beyond, we look forward to meeting the challenges ahead and providing our distribution partners and independent agents with first class service and competitive underwriting solutions. [SM]