Automated Life Underwriting

Many life insurance companies are turning to technology to speed and remove cost from the underwriting process. Automated underwriting systems have been developed to reduce the manpower, time and/or data necessary to underwrite a life insurance application, while maintaining the quality of underwriting decisions. Although these systems have been in existence for some time, not much is known about how they are used in the industry. The Society of Actuaries’ Marketing and Distribution Section Council, the Product Development Section Council and the Committee on Life Insurance Research engaged Deloitte Consulting to conduct a survey investigating this question. The results of the study are presented in this report. This report covers many aspects of how much industry interest there is for automated underwriting systems, the goals life insurers seek to accomplish in using them, how the automated systems function, and how successfully they perform. In addition to many detailed findings, the survey revealed several key points. First, life insurers have a strong desire to reduce the time and cost, and increase the consistency of underwriting. Second, while the penetration of automated underwriting systems is still relatively low, life insurers are quite interested in their potential to improve the efficiency of underwriting. Finally, despite some concerns with implementation and maintenance challenges, life insurers who are using automated underwriting believe they are beneficial to their organizations. If given the opportunity to reconsider whether to implement automated underwriting, even insurers who are less satisfied with their own systems would choose a different option, rather than forgo automated underwriting altogether. While these results are informative, the research team is also investigating several avenues for follow-up research into the effectiveness of automated underwriting, potentially including mortality experience and case-by-case comparison of automated versus traditional underwriting.