Underwriting - Adapting to a pandemic world and insights for the road ahead.

- A Virtual Panel Discussion Featuring Experts in the Field of Life Reinsurance - DuWayne Kilbo, Moderator

I'm extremely delighted to have available three distinguished speakers from the life reinsurance side of our business for Windsor's first Virtual Panel Discussion!

With so much going on today as it pertains to COVID-19 and the evolution of the life insurance industry, this is an opportunity to hear from well-known and highly regarded reinsurance industry executives for their input and thoughts on various topics where they provide support and guidance to the industry.  Also, we will hear their comments on how underwriting and processes may evolve, as they share their insights about the impact these changes may have on distributors and retail sellers of life insurance for the road ahead.

On our panel, we have:

  • Chris Behling, Chief Underwriter, Life & Health, Senior Vice President, Americas, Swiss Re
  • Kathryn Cox, Senior Vice President, Business Development, U.S. Markets, Reinsurance Group of America, Inc. (RGA)
  • Nichole Myers, Underwriting Propositions Lead, Senior Vice President, Life & Health Products, Swiss Re


Panel moderator:

  • DuWayne Kilbo, Senior Vice President & Chief Underwriter, Windsor Insurance


Let me serve up my initial questions by first setting the stage:  COVID-19 has had a major impact upon the life insurance industry.  Some of these impacts are restrictive in terms of maximum allowable ages and ratings, available capacity and foreign travel.  However, some have been positive, specifically relating to the evolution of fluid-less (accelerated) underwriting, and other similar streamlined models and doing business electronically.

As reinsurers, what type of support and tools do you provide to direct writers to help them do business electronically?

Chris: The COVID-19 pandemic has created a confluence of events. Consumers are becoming more aware of their need for protection and at the same time, life insurers are adopting new approaches to underwriting. Many of these changes are ones that are more consumer- centric and ones that the industry has been considering for decades. In many ways the pandemic is "accelerating the inevitable." As reinsurers we should provide support in the forms of data, knowledge, tools and risk sharing in order to help our clients' lean into these more consumer-centric processes.

Kathryn:   Reinsurers are fortunate to have a broad view across the industry, including visibility to the challenges direct writers are facing and the various tools being considered.  We are able to help analyze those tools by applying a broad base of data that varies by target market, distribution type, and underwriting method. This analysis can include availability of data, completeness, and protective value.  We can also share best practices for interpreting information and solutions to score and thus automate assessment across a spectrum of tools.

We engage from a number of different angles including some that may be less familiar to your readers. To start, as a risk-sharing partner, we evaluate, and in some cases, help design evolving underwriting programs that are on the path toward digitization. Our actuarial, underwriting, medical, and data science staff each plays an important role in what ultimately requires a very holistic approach and a balance between managing risk and innovating the consumer journey.  We leverage our core risk expertise combined with learnings from RGAX LLC to transform insurance across the value chain.

With regard to tools, we have capabilities and products that span from distribution to underwriting to inforce management.  For instance, RGAX consults with carriers on evolving distribution strategies and brings to bear our analytics.  We assist carriers with digital underwriting by helping them deploy our RiskDimensionsSM products such as our Rx scoring solutions, Digital Health Data scoring, TransUnion's TrueRisk® Life credit-based insurance score, and AURA, our automated underwriting product.

There are several companies today providing electronic underwriting risk selection tools and data, including health records, lab history, health claims, pharmacy information and credit attributes. Do you find some of these tools to be better predictors of mortality than others?

Chris: The use of alternative data sources is a promising development that has been accelerated by the pandemic. Leveraging these alternative data sources has the potential of creating a much closer match with the information contained in a traditional APS. It is therefore not hard to envision leveraging these sources instead of an APS without experiencing significant mortality impact. Of course, use of these alternative data sources must be done in accordance with applicable law and regulation.

Nichole:  I think we need to change the question a bit.  What we need to understand when leveraging alternative data sources instead of traditional APSs, labs and exams is what information could be missing from these alternative data sources, what is the potential mortality impact of not getting that data and then finding ways to mitigate that impact.

Currently the challenges associated with leveraging these data sources in lieu of a traditional APS are:

  • Low hit rates
  • Multiple data sources are usually necessary to generate the same information contained in a traditional APS
  • Information takes on multiple forms which can make it challenging to integrate into systems and difficult for underwriters to navigate


Leveraging these alternative data sources in-lieu of traditional paramed exams and insurance lab testing is more complicated and poses other challenges including:

  • Missing tests for conditions and substance use that are not generally self-reported
  • Potentially missing standard and non-standard insurance tests that are generally not completed in a routine medical exam
  • Outdated vital records


Swiss Re stands ready to help our clients determine the mortality impact of not receiving these test results and we are prepared to discuss ways to mitigate any mortality slippage.

Kathryn Instead of better or worse, I would suggest that they are simply different views of risk ranging from medical to behavioral.  There are several electronic underwriting risk selection tools and data available.  The new tools are getting more attention and testing as a result of COVID-19 and the corresponding unavailability of traditional tools.  These vary in their maturity and historical data, which impacts the ability to study each against population data and insured data.  Pharmacy information and credit have a wealth of data and have been studied extensively with proven ability to predict mortality and provide protective value.


Digital health data is coming together.  There are many different types of data, and sometimes all types are available for an individual while only partial data is available for others.  As data is aggregated and becomes more readily available across a larger proportion of individuals, it will increase in value, and the ability to predict mortality will become more refined.  Scoring tools will be especially important for digital health data to enable direct writers to streamline evaluation.

Are mortality results for these tools similar to traditional insurance exams and labs?

Kathryn:   Short answer – yes and no.  Actual answer – it depends.  Introduction of a new tool in and of itself doesn't impact mortality positively or negatively.  The important question is how that tool will be used and interpreted.  Credit, for example, is a behavioral indicator.  Inclusion of credit with traditional insurance exams and labs enables direct writers to refine their mortality results through more appropriate underwriting risk classification. This could be through improving an individual's class or dropping them down a class.  If done correctly, this can lead to better overall mortality results.  Insurance exams and labs provide current information on an individual, and some tests that are common for insurance, such as cotinine, are not common in a typical medical blood profile found in digital health data.  Identification of non-smokers and smokers is an important driver of mortality.  Recent exams and labs reduce the risk of anti-selection should an individual have a new health concern that is unlikely to be identified through prior exams or digital health data.  The variance within these data sources must also be considered, and this is largely due to the fact that the digital health data only contain data that reflects the patient's interaction with the healthcare system.  If the patient hasn't seen any type of healthcare provider in a year, then there won't be any data pertaining to encounters.

Use of alternative sources of data versus traditional insurance exams and labs have the benefit of streamlining the processes, creating a less intrusive experience for the individual and reducing underwriting costs.  Often, direct writers will use the expense savings to offset mortality slippage (worse mortality) and maintain similar premium rates.  There will always be a subset of insurance that requires parameds and labs, along with financial justification, to provide the individual with the most appropriate underwriting class possible and protect the individual from over-insurance.

As mentioned already, underwriting restrictions were implemented due to COVID-19.  From your viewpoint, what type of thought and resources went into the development of these restrictions?

Kathryn:  The underwriting restrictions that were implemented were in reaction to concerns (actual and perceived) that applicants would be unable to get parameds and labs as a result of states implementing pandemic protocols.  Labs were quick to react and adjust, but some applicants weren't comfortable having an individual come to their home or going to a secure site.  Direct writers reacted with varied responses to ensure their ability to continue to write new business while also protecting the quality of business written.in order to protect the overall quality of the portfolio.  Direct writers are also in different stages of consideration and review as it relates to various alternative underwriting tools, and thus, those further along were able to respond to the restrictions with more confidence in the protective value they were getting and, conversely, giving up, in setting up their new processes and guidelines.

What are the triggering events that will ultimately cause these restrictions to be lifted?

Kathryn:  This will be driven by the states and their mandates to re-open businesses, along with comfort levels of individuals to go out and undergo traditional underwriting.

Do you see reinsurers playing a greater or lesser overall role in underwriting, having greater or lesser influence in evaluating risk, pricing and process, or about the same, as a consequence of COVID-19?

Nichole:  Specific to COVID-19, the pandemic is a global phenomenon.  So I think that global reinsurers, like Swiss Re, can help our clients learn from the experience in other regions.

At a more general level, I think it is important that reinsurers partner with carriers to bring new solutions that help them grow their business, transact business more easily and retain and grow their relationships with policyholders.  It won't just be about providing reinsurance at the best rates.  It will be about helping carriers grow.

Chris:   In many ways, the accelerated adoption of accelerated processes is like the adoption of preferred underwriting over a decade ago.  We are making a lot of changes all at once without the benefit of time to understand their impact on mortality.  I think reinsurers have a big role to play in helping the industry as a whole move forward and helping implement these consumer-centric innovations while providing guidance along the way.

Kathryn:   As stated earlier, reinsurers have a unique perspective across the market and an ability to analyze the value and impact of tools available to assess risk.  Unless a direct writer has a significant block of inforce and writes a meaningful amount of new business, it is difficult to produce credible results at an individual company level.  Reinsurers can consolidate information and provide feedback at an industry level, enabling direct writers to refine and match this up to their unique profile.  Reinsurers have the ability to assess difficult medical and financial risks and will continue to serve in this capacity.  Reinsurers also have the ability to create scoring tools that are supported through sharing of risk, which creates an alignment with direct writers and similar view of the risk/reward.  An example of this is RGA's Digital Health Data scoring tool.

Do you see any impact on product pricing as a result of COVID-19, either from the point of view of unfavorable mortality, or from the potentially increased exposure caused by prior adjustments to underwriting?

Kathryn:   It's too early to appropriately answer this as the ranges of expectations vary greatly at this point.  In addition to using alternative underwriting tools in place of parameds and labs, analysis of many of the adjustments to underwriting that were being considered for use in accelerated underwriting programs has also sped up as a result of COVID-19, through increased adoption and, thus, a broader review of the viability of each tool.  TAI/SOA/LIMRA are kicking off an industry study to gather seriatim data from direct writers to study the mortality and lapse experience of COVID-19-coded deaths and all-cause mortality.  This will be extremely informative for the industry.  All of this will help inform the industry of the tradeoffs between adjustments to underwriting and a more consumer-friendly process with greater access to the un- and underinsured.

Let's talk about the future.  What does the post COVID life insurance world look like to you?


Nichole:   It is said that "necessity is the mother of Invention" and this is proving to be true in the life insurance industry's response to COVID-19.  The pandemic has accelerated many of the advancements that our industry has been slow to adopt.  The advancements benefit both the industry and the consumers it serves.  As we emerge from the pandemic, we should not "roll back" some of the prudent changes we have adopted.  Where possible and prudent we should continue the rapid introduction of the consumer-centric tools and methodologies that are yielding promising, if not conclusive, results.

Kathryn:  The COVID environment has resulted in many individuals finding new ways to work and connect. The way insurance is sold has evolved, and many of these practices will sustain. This opens access to many individuals who, due to their location, need and size of policy, have become unreachable through traditional agent face-to-face means.  Where some direct writers were moving to electronic processes, this environment has accelerated those projects, and agents resistant to move to e-applications and electronic processes have made the change to maintain their business.  Analysis of alternative underwriting processes will continue, and direct writers and reinsurers will work together to develop best practices and ways to automate assessment of this data and these tools.


I am hopeful that consumer's awareness of the need for life insurance protection increases, although I believe that the industry has to do its part by making sure that products are relevant for today's consumer and they are engaged on their terms.  It is likely, therefore, that we will continue to see an acceleration of our effort to digitally transform while recognizing that some of the same challenges will exist and need to be managed.

What processes and risk assessment tools do you envision that will remain after COVID, and what do you see being developed in the future?

Chris:   Earlier you mentioned carriers that were expanding their "fluidless" programs.  The term "fluidless" underwriting is a misnomer.  Our goal should not be to underwrite without fluids, but rather to determine when fluid test results will provide significant protective value and in the cases where fluids are required, we should aim to get those test results in the least-invasive, most consumer-centric way possible.  The goal should not be to avoid fluids, but instead to avoid the need for exams, labs and traditional APSs.  So, in particular I hope that eApplications with reflexive questions and the prudent and responsible alternative data sources we have been testing continue to be used.


Kathryn:   Digital health data will remain and continue to evolve as more data is aggregated and digitized. Scoring of this data will be imperative, and those who have been working toward this and investing for many years will have an advantage with this massive amount of data.  Future tools will combine much of the data directly or indirectly, and dynamic underwriting will become the new approach, ordering only the information needed based on the unique characteristics of each individual.  I also envision further streamlining and efficiencies from pre-application through underwriting to post-issue as a result of data and analytics that work synergistically to incrementally paint a complete picture of the applicant.

How do we adapt to these changes?

Chris:   The path forward could be marked by moving away from age and amount charts and toward underwriting the individual and determining what additional information is needed based on the available information.  In addition, instead of expanding existing "fluidless" programs, it may make more sense to blur the lines between accelerated and full underwriting, leveraging less-invasive, more consumer-centric methods of obtaining fluids only if they add significant protective value.

Nichole:   Our ultimate success will allow us to effectively and cost-efficiently access and use these alternative data sources, building rule sets that can analyze and act upon the data and generating agent and BGA adoption of processes including eApplications.   So while there is still much work to do, our industry's time is now to lean into these innovations and create a more consumer-centric approach to making our products available at a time when more consumers are becoming aware of the value of the protection we offer.   While it has long been said that life insurance is "sold not bought," our industry currently has a significant opportunity to shrink the $25 trillion protection gap by helping turn consumers' awareness of their need for protection into the actual purchase of protection.

Kathryn:   We adapt by keeping our eye on where we are headed then working together to incrementally understand the impact of each change that we make. The COVID environment has created a much-needed shift in the insurance industry and has been a catalyst to accelerate change.  Accelerated underwriting programs will continue to evolve, and the direct writers that succeed will be those that take a measured approach and employ a "test, learn, and iterate" method.  Direct writers concerned about disrupting their distribution will need to find ways to communicate the vast need and opportunity in the market and the ability to have multiple approaches to provide a financial safety net to as many individuals as possible. There is no shortage of opportunity.

DuWayne:   This wraps up our virtual panel discussion.  I appreciate the panel's keen insight, thoughts and guidance. It is much appreciated!  I personally look forward to continuing our discussion as the life industry, underwriting and processes continue to evolve.

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