It’s time for carriers to innovate rapidly to respond to the buying preferences of members of these generations.
As an example, if the target customers are millennials and Gen Zers who need a simple term life insurance solution, you may want to focus on instant decision underwriting and lower face amounts to meet the most basic needs.
This approach could mean that many historical riders and features are actually not necessary.
It likely also means that the tools used in underwriting need to focus on information that is available instantly as opposed to traditional methods that could take weeks or even months.
The marketplace has experienced a surge in insurance companies offering no-medical-exam life insurance — and accelerated underwriting options in particular — that satisfy the growing demand for quick, contactless coverage.
“We went from having three [AU options] in early 2020 to seven in 2021, with more on the horizon for 2022,” says Eloise Spinello, associate director of account management at Policygenius. “More insurers are adjusting to demand by offering no-med options that account for all health classes as well, rather than reserving these options for only the healthiest applicants.”
In addition to their convenience, accelerated underwriting policies are frequently one of the most affordable options for shoppers. Policygenius Life Insurance Price Index data from the last year shows that no-medical-exam term insurance policies are competitively priced compared to term policies requiring a full medical exam — and some applicants even paid less for no-medical-exam term coverage. For example, 25-year-old females buying $250,000 in coverage paid 1.6% less in 2021 for a no-medical-exam term policy than they did for a traditional policy.
The use of electronic health records in insurance underwriting has long held terrific potential to boost the industry. Progress has been slow to date, but that is about to change.
By late-2022, EHR will be standard at 50% of the top 20 carriers, said Nicholas Irwin, director of life underwriting at Verisk.
“I think once we get to that 50% hit rate threshold and same-day turnaround time, I’d be very surprised it didn’t become a standard at that point,” Irwin said Tuesday during the Society of Insurance Research annual conference.
The acquisition of a medical record, a crucial part of life underwriting risk-assessment, largely remains largely an inefficient paper process. The availability of healthcare information as a data stream is a critical advantage for insurers using rules-based decision engines for accelerated underwriting.