October 02, 2013

Jerry Whetnall, Stoneriver
Jerry Whetnall, Stoneriver
In the not-too-distant past, both the carrier and the proposed insured understood that it took time, sometimes between 45 and 60 days to process an insurance application, especially for life or health insurance. But times, along with insurance buyer and agent expectations, have changed. The result was carriers racing to reduce underwriting turnaround time from 45 to 20 days, then from 20 to 5 days.

The drastic reduction in underwriting turnaround time was successfully accomplished partially through product design, but primarily through advanced technological capabilities such as electronic applications, ACORD Standards for evidence reporting, and automated underwriting systems that could readily assess the evidence to render a decision. With nearly 77% of all carriers currently employing these technologies, these time reducing capabilities are no longer carrier differentiators – they are the table stakes just to play in the game. No longer is 5 days considered quick turnaround. Today's insurance buyer and agents expect a decision at point of sale. So, the race continues.

To develop a successful strategy for underwriting in minutes versus days, carriers must understand the vital elements that impact the speed-to-issue paradigm. Three key factors compel the life insurance industry: consumer and agent demand for product innovation and instant gratification; the life products provided by carriers; and the advanced technology that carriers have available to them.

While sale to policy issue times have significantly improved, the prospective buyers for life products, and the agents who serve them, have become quite technology savvy when it comes to accessing information and having purchasing power at their fingertips. This technology culture's expectation of immediate response doesn't change when it comes to buying and selling insurance, requiring carriers to find a way to deliver to expectation.

[Helping life insurance agents demystify the product at Lincoln Financial]

Carriers have responded to the market expectation in a couple ways. First, via a new type of product which is often referred to as Simplified Issue. In reality, it is not so much a new product category as it is a new process – that is, simplified underwriting. For face amounts up to $500,000, and sometimes beyond, carriers are now often underwriting with data provided in the application and from three evidence sources; Medical Information Bureau (MIB), Motor Vehicle Reports (MVR) and prescription histories. When the right technology and process are in place, a typical request for information and response from these evidence providers can take under a minute.

The challenge for carriers is to tie all of the people, product and technology elements into a seamless, collaborative, single-touch experience for the proposed insured or their agent.