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Life companies are buckling up to take advantage of fast evolving tools in Accelerated Underwriting (AU). AU is now a big part of most Life companies’ overall operations, as carriers seek to optimize workflow without impairing underwriting performance.
To better understand trends across the market and enable our clients to stay ahead of the curve, Gen Re developed a comprehensive Individual Life Accelerated Underwriting (AU) Survey. Now in its third year, the 2023 study included topics such as U.S. program eligibility requirements, underwriting tool usage, program monitoring and expected mortality impact. Here are some of the biggest takeaways we observed from this year’s results.
Eligibility rates continue to rise steadily over time – from 42% in 2021 to 53% in 2023 – as carriers allow older ages and higher face amounts to be included in their programs. (We define eligibility rates as the ratio of applicants within the age and amount eligibility limits as a proportion of the total of applicants on all products.)
Acceleration rates have held steady over time. This can be attributed to carriers looking to balance process ease with appropriate risk management. (We define acceleration rates as the ratio of applicants with an accelerated decision – neither labs nor APS – as a proportion of all applicants within the age and amount eligibility limits.)
The top AU monitoring tool in use today are random holdouts at 63%. Other common controls in place include recissions (51%) and post-issue APSs (44%).
When we look at survey results over time, post-issue APS usage has dropped somewhat. Key challenges include an inability to capture APSs in a timely fashion and lack of resources to complete the reviews.
Mortality slippage analysis was based on the responses of 26 survey participants who provided confusion matrix data using random hold out and post-issue APS analysis. Mortality slippage estimates based on confusion matrix data continue to be higher than assumed mortality slippage.
The average mortality slippage calculated was: Random holdouts, 17%; Post-issue APS, 14%.
It’s worth noting that mortality slippage results based on confusion matrix data vary widely from carrier to carrier, driven by the design of individual programs.
Approximately half (54%) of participating companies have made material change to their AU workflow over the past 12 months. The pace of change will not be slowing anytime soon, given the amount of planned AU workflow changes expected over the next two years.
The most prevalent planned changes to AU workflows in the next two years include the addition of data sources, modifications to face amounts, and modifications to algorithms.
Strategically, Life companies want to improve the client experience by implementing underwriting efficiencies. But we’ve found that underwriting teams need help assessing newly available tools and their potential impact on AU workflows. Carriers cited numerous related challenges, ranging from managing mortality slippage, legacy technology systems and lack of AU data, to competition and pricing.
If you can relate to any of the above concerns, we can help. Reach out to your Gen Re account representative to connect with our team of accelerated underwriting experts. In addition, you can also participate in our AU Study Group to discuss the latest AU trends with industry experts and help shape future surveys.
For the purposes of our survey, we define AU as any solution aimed at decreasing time from application to issue for applicants who meet criteria that qualify them to bypass a paramedical exam and/or fluid collection.
