The High Cost of Waiting Until Underwriting in Life Insurance Applications
Things are Not In Good Order (NIGO) when someone claims they don't have a driver’s license, but public records show that not only do they have a license they also have a history of traffic violations. Unfortunately, the carrier may find this out AFTER they've moved the application to underwriting and ordered additional evidence.
We call these late-stage information pulls “The 60% Problem,” because that's the average paper application rate for NIGO.1
About 70% of life insurers wait until underwriting to order key data according to our 2023 internal study. For these insurers, key applicant data is verified only after an application reaches underwriting. While this may feel like a familiar operating model, it often introduces delays that allow incomplete, inconsistent or misleading information to flow deeper into the process before action is taken.Late-stage verification can turn underwriting into the first real checkpoint for risk rather than the final step in a well-informed process. Honest qualified applicants may be delayed by correctable errors while bad actors have more opportunity to slip through the front end. In effect, the process becomes reactive rather than proactive, forcing carriers to manage issues after they have already disrupted the workflow.
How LexisNexis® Life Smart Path Helps
Life Smart Path brings important risk and verification insights into the application stage, helping insurers reduce friction for qualified applicants and flag potential risk early, limiting the volume of cases that require manual intervention later. The result is a process that is better for operations, better for applicants and better for long-term risk management.
Insights and Resources
Blog Post
Life Insurance Application Misrepresentation
Early-stage blind spots can leave life insurers to address misrepresentation risk after it has already moved deeper into the application workflow.
Blog Post
Life Insurance Best Opportunities
Carriers need to protect against bad actors’ intent on perpetrating fraud, but small human errors are not high-risk applicants trying to game the system.