Having the same dream again and again is the well-known phenomenon of recurring dreams. Recurring dreams are personal and often involve places, people and things we recognize. While they can be pleasant, 77 percent of recurring dreams<\/a> recycle the same negative scenarios or fears.<\/p>\n Like a recurring dream, we generally see the same challenges and frustrations show up year after year in the life insurance industry<\/a>. Challenges like needing quicker claims resolution, more efficient product development cycles and mainframe replacement seem to be ever-present. But the recurring challenge we\u2019re going to focus on in this blog is life insurance underwriting turnaround time.<\/strong><\/p>\n According to Securian Financial, traditional underwriting usually takes about 45 to 60 days to complete<\/a>. Many factors come into play during the underwriting process, including an applicant\u2019s medical records, credit history, driving history and more, which all help the carrier analyze the chances of them dying before the end of a policy term. This fundamental review procedure has not changed much through the years, but we have seen incremental improvements due to digital records processing and better electronic integration with information sources.<\/p>\n Customer and agent satisfaction<\/a> is always top-of-mind for insurance companies. Today, insurers are spending millions of dollars on digital transformation to improve the customer experience. A primary factor that impacts the experience for life insurance customers is the length of the underwriting process itself. In fact, 50 percent of all people<\/a> searching for life insurance value convenience, speed and simplicity in underwriting above all other factors.<\/strong><\/p>\n The underwriting of the future requires a customer-first mindset. Let\u2019s take a look at a few ways insurers can improve the time it takes to underwrite a life insurance policy.<\/p>\n When an insurance company is deciding whether to issue a life, disability or health policy for an individual, they need to collect certain information to make that decision. We commonly refer to this information as \u201cpending requirements.\u201d Some of the information comes from the applicant, and some of it comes from outside sources like healthcare providers. The type of information and level of detail needed can vary greatly from application to application.<\/p>\n Here are some factors life insurers use to decide what information they need to collect:<\/strong><\/p>\n The main business problem insurance companies face is identifying and collecting the necessary information in a timely manner. The process can take a very long time due to the number and types of people and other companies involved. Unfortunately, neither the applicant nor the agent wants to wait for long.<\/p>\n As the days drag on, industry research shows the \u201cnot taken rate\u201d \u2013 the percentage of applicants who refuse to take a policy they applied for \u2013 begins to skyrocket. This means the longer it takes to gather this information the more likely your company and agent are wasting your efforts. In addition, your company will incur expenses for collecting the information you need to make the decision. Anything that can shorten the time frame adds value to the underwriting process.<\/strong><\/p>\n Through the years, the evolution of processes and technology has helped speed up life insurance underwriting, improved customer satisfaction and the policy-taken rate, all while decreasing the cost to insurers. What was once mail and phone calls turned into email and enterprise application integration (EAI), which helped automate much of the information gathering but didn\u2019t necessarily help with the process.<\/p>\n So, where do we stand today? The industry is looking at newer, more creative ways to solve its underwriting issues. Companies that successfully solve these issues and accelerate underwriting have four things in common. They successfully deal with legacy technologies, focus on the customer experience, leverage data to understand the process and the impact on customers and profitability, and see the value in modernizing this process.<\/strong><\/p>\n Let\u2019s look at some newer tools and ideas for improving life insurance underwriting.<\/p>\n Business process management<\/a> (BPM) tools are not a new technology. The Workflow Management Coalition (WfMC), founded in 1993 with original members including IBM, Hewlett-Packard, Fujitsu, ICL and Staffware, formed as a consortium of software companies to define standards for the interoperability of workflow management systems. Before disbanding in 2019, they said the following about BPM<\/a>: \u201cBPM is a discipline involving any combination of modeling, automation, execution, control, measurement and optimization of business activity flows, in support of enterprise goals, spanning systems, employees, customers and partners within and beyond the enterprise boundaries.\u201d<\/p>\n The roots of BPM solutions date back to the 1980s with companies like FileNet and their system to route scanned documents. In the 2000s, the rise of enterprise application integration (EAI) systems helped automate the communications between applications but didn\u2019t necessarily have process workflow maturity.<\/p>\n As BPM solutions continued to evolve in the 2000s, developers added new functions to support process modeling, reporting and analytics. Today, you can use BPM as a central hub for handling complex processes and managing workflows for underwriting processes by making sure agents handle their tasks and pass them through the workflow.<\/strong><\/p>\n BPM solutions leverage a central rules engine maintained by business users who can visually create and manage process flows and decision points. Additionally, BPM solutions can leverage tools such as application programming interface (APIs), robotic process automation<\/a> (RPA), low-code applications<\/a> and machine learning\/artificial intelligence (ML\/AI)<\/a> models to automate integrations with internal and external applications.<\/p>\n RPA, in particular, can help carriers with a legacy-centric environment where older systems contain relevant information that is difficult to access other than through manual lookups. You can seamlessly add RPA processes into a BPM process flow.<\/p>\n The reporting and analytics these suites provide allow carriers to monitor the underwriting process to better understand efficiencies, inefficiencies and throughput. Modern BPM solutions provide a robust collection of tools to help make the underwriting process more efficient and profitable for carriers today. This data provides not only insights into the process but can also highlight potential areas that may impact the customer experience.<\/p>\n Traditionally, the underwriting process has been a manual, often paper-based and lengthy process with incremental efficiency gains over time. Words like \u201cautomated\u201d and \u201cdigital\u201d are still not synonymous with underwriting because legacy systems often remain the bottleneck.<\/p>\n You can use modern ML and AI tools to speed up your existing underwriting process. Making decisions is at the crux of the underwriting process, and decisions depend on required information about the insurance applicant. The more data your underwriters have about an applicant can lead to a more accurate decision.<\/strong> But the more data an underwriter must sift through, the more difficult the decision becomes. ML and AI can assist by processing large quantities of disparate data in seconds. Here are a couple of ML and AI life insurance underwriting use cases.<\/p>\n These are only two use cases that help illustrate how you can leverage ML and AI. They can take advantage of customer and process data the carrier has collected to pro-actively help improve the underwriting process as well as the overall customer experience.<\/strong> And as discussed in the prior section, you can also use ML\/AI models as part of your overall BPM workflow process.<\/p>\n We will continue to see lengthy underwriting processes for more complex or high-value applications despite introducing new tools and processes. This places extreme importance on communication with the applicant and agent. To improve this communication, you can develop a digital journey to better understand your customer\u2019s needs and experiences.<\/p>\nImproving Life Insurance Underwriting<\/h2>\n
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Process Improvement and Business Process Management Tools<\/h2>\n
Artificial Intelligence (AI) and Machine Learning (ML)<\/h2>\n
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Using a Digital Journey for an Improved Customer Experience<\/h2>\n