As an insurer crafts an application, the goal should be to balance customer experience with accurate disclosure. Behavioral science can provide proven strategies to increase customer disclosure and reduce cognitive load, which is the amount of thinking or memory recall required to complete a task. For example, RGA behavioral science research demonstrates that the number of questions in an application may not be the best metric for an “easy” or “fast” application. If the questions are clear and can be answered quickly and easily, application completion rates as well as disclosure should improve. • Evidences : To streamline the underwriting process, insurers continue to emphasize digi - tal evidences with near real-time availability. Medical claims histories and clinical labs are attractive because they are structured data that are conducive to automation and scoring. Still, it is important to remember not all “hits” are created equal. For example, a strep test from 5 years ago is less valuable than a complete blood count (CBC) from last month. Electronic health records offer the appeal of richer data, but often arrive as a mix of structured and unstructured data that may require human underwriters to review and analyze. Insurers should consider the combination of evidences used and how they work together. The value of a tool will always be greater when evaluated in isolation relative to the incremental value the tool can provide when used in conjunc- tion with other evidence. While challenging to estimate, exclusivity is a key consideration. For example, medical evidence sources will naturally be more correlated with each other than with behavioral and other non-medical evidences. Finally, new types of evidence must be used meaningfully to move the needle on mortal- ity. What action is being taken because of the evidence results? How often does this evidence change an underwriting decision? • Automation vs. Human Underwriters : Auto - mated underwriting continues to develop in re- sponse to a desire for more instant decisions. But a strong push toward instant decisions may result in an insurer turning more applicants away. In all likelihood, human underwriters are necessary to evaluate applicants whose risk profiles are more complex.
If fully automated decisions are a must for a cer - tain product, “gray” or nuanced cases may not fit. Tightening underwriting thresholds can pave the way for increased automation while maintaining favorable mortality performance, but results in lower acceptance rates (i.e., higher rates of de- cline). In practice, this strategy must be balanced with the customer experience. Another option is to offer different products to applicants not approved for the primary product. For example, insurers could offer these applicants a guaranteed issue product or an accidental death benefit. Insurers continue to explore alternative pathways for customers who are not a fit for the core product. Quick Take: The Fundamentals of Monitoring When launching products in this space, it’s critical to define and evaluate early indications of success. Post-issue audits can provide many such metrics. Different tools and approaches can provide differ - ent levels of insight into mortality indications and potential program refinements. • MIB Plan F or ReCheck, where various third- party data calls are rerun a set time after policy issuance (e.g., 90 days), can provide a more pas - sive means of monitoring. These resources flag cases of interest for further underwriter review with the aid of more robust evidence sources. • On the other hand, post-issue APS or EHR audits require more underwriting resources to complete, but offer an even fuller picture of risk factors that may be slipping through the cracks. Depending on the audit findings, cases can be re- underwritten to provide a comparison between the simplified underwriting decision and some - thing approaching a fully underwritten decision. All these monitoring approaches can be beneficial, and each program’s specific goals should inform its unique approach to monitoring – whether post-issue audits, or even active monitoring of key attributes such as score distributions and business mix. Keep in mind: The value of any monitoring program increases greatly when it is part of a broader feedback loop that informs further underwriting development efforts. Managing the Market Marketing plays an essential role in the success of AU products, SI products and everything in between. When insurers manage the pool of people aware of and seeking the product, they boost their chances of attracting healthier lives even before any underwrit- ing happens. There are a variety of approaches to influence this. Some are quite simple, such as ensur -
ON THE RISK vol.40 n.3 (2024)
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