Optimize the Supplemental Life Underwriting Process and Make Quicker, More Confident Risk Decisions

Open enrollment season for employee benefits is here, making it one of the most hectic times of year for life and health insurance underwriters.  The time between November 1st and January 15th is one of the busiest times for human resource professionals, health insurance representatives, and supplemental life underwriters and actuaries.  As employees choose the right health, vision, dental and group life insurance, many will opt for additional or supplemental life insurance.  Supplemental life insurance is a great way to add additional coverage at a lower cost than purchasing an individual life policy.  

Supplemental life underwriters face challenges when attempting to make a fast, accurate risk assessment:

• Limited and self-reported information from the proposed insured: Applicants are provided a questionnaire that asks about their medical history, which can make it easy to forgo details about a medical diagnosis that would lead to additional underwriting requirements. A 2020 survey by Finder.com indicated that 14.7% of American adults admitted to lying on an insurance application.
• Adding friction to the underwriting process causes significant drop-out rates: According to Due.com, up to 20% of applicants drop out of the process when underwriters request additional requirements, such as blood samples or obtaining an attending physician statement. Many applicants believe purchasing supplemental life insurance will be simple, but when invasive requirements are introduced, they no longer pursue additional coverage
• Traditional underwriting can take weeks, depending on the complexity of the case: Underwriters are burdened with time constraints to get policies issued within the enrollment period. High volumes of applications in a small window of time cause stress for the underwriter and frustration from the applicant if it takes weeks to receive a decision.

Supplemental life underwriters make risk decisions based on past experience with the group and health questionnaires with “knock-out” questions, meaning, they ask questions that can cause an applicant either be uninsurable or require additional information to make a decision.  There is not typically an agent helping an applicant understand the process, so when they receive a letter requesting blood and urine samples or to provide medical information from their primary care provider, it can be frustrating.  If they do provide the information and it takes weeks to get a response, the experience may cause them to disengage altogether.  

How can supplemental life underwriters improve the experience for the applicant while at the same time making confident and swift risk decisions?  They can follow the lead of their counterparts on the individual life insurance side of the house by collecting additional data to make an informed decision faster.  Pulling in motor vehicle records, public records, credit attributes, and medical history can provide additional insights that will help an underwriter make a decision while ensuring that actuaries price the business appropriately. 

LexisNexis® Risk Solutions provides a predictive model that gives underwriters a robust view of the applicant without invasive application requirements.  LexisNexis® Risk Classifier utilizes attributes from public records, driving history and credit, which are distilled into a numerical risk score so underwriters are able to make better informed underwriting decisions. These thresholds can customized to fit underwriting standards and set the threshold for cases to be referred to an underwriter — ensuring  that simpler cases are fast-tracked, and that underwriters see the complex cases that require deeper attention. The score allows underwriters to make faster decisions and offer a better customer experience.

If you are ready to improve your underwriting process with the use of data and Risk Classifier, visit our site or email [email protected].