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This past May, Gen Re released the results of our Group Medical Evidence of Insurability Underwriting Survey. The survey covered Group Life, LTD and STD products with a focus on how companies staff and process their Evidence of Insurability (EOI) applications. The results provide participating companies with an opportunity to benchmark themselves against the industry.
The 20 participating insurance companies reported receiving more than 1.8 million applications each year, up from 1.5 million as was reported two years ago - so the survey results have a lot of experience behind them.
The medical underwriting function and EOI underwriting decisions have become integral protection components for managing group insurance. Beyond the risk management value, operational costs are significant. Benefit costs continue to shift to employees, and employers continue to respond to employees’ growing interest by offering them voluntary products. Because supplemental benefits are becoming increasingly important to employers as a recruitment and retention strategy, carriers must be prepared to keep up with rising EOI application volumes that reflect growth in enrollment in these benefits.
Below are some key highlights from the survey.
Our survey found that 13 business days is the average processing time for a Group Medical EOI application, although the time can vary widely by company. Using technology should drive shorter turnaround times and also help underwriting teams handle spikes in production volume during the year.
Although many companies reported having an automated EOI system, a significant number of applications are still being reviewed by a medical underwriter.
A majority of survey participants - 95% for Group Disability and 100% for Group Life - reported that medical underwriters are solely responsible for medical EOI underwriting. Where additional resource support is provided, it typically comes from managers and medical resources including physicians, nurses and physician assistants. On average, companies reported support ranging from one physician to nine medical underwriters.
Meanwhile, 75% of participating companies said they offer a formal training program for EOI - one that each participating company created and implemented for its respective support team. A few participants mentioned they supplement their formal training program with industry association training.
In our 2012 survey, the top challenge facing Group Medical Underwriting departments was technology deficiencies. In 2016 it was how to manage volume during peak enrollment periods. The 2018 survey found both these concerns at the top of the list.
Of course, these two concerns are related. With increased adoption of available technologies, improved operating efficiencies and the ability to handle spikes in application volume should be realized. The use of straight-through processing is one way to achieve this.
Straight-through processing (STP) refers to a web-based (electronic) EOI application where the insurance is either approved or declined by an automated system and does not initially require the review of an underwriter or other person to make a decision. Seventy percent of participants shared that they have this automated capability. Despite progress with STP, only 45% of EOI applications are submitted online, a main requirement for STP. Of those utilizing STP, an automatic decision was made on two-thirds of applications with one-third requiring the review of an underwriter.
o remain competitive in the supplemental benefit marketplace, insurance carriers will need to adequately invest in their EOI capability - from medical underwriting expertise to technology and tools. Finding the right business partners with solutions for streamlining data collection, analysis and underwriting decisions, will help ensure carriers take advantage of technological advances and other support to sharpen their competitive edge.
