Underwriting & Claims Watch – 10 Years of progress
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At Swiss Re, we regularly undertake market wide surveys in order to gain, as well as share, a greater understanding of the movements within the life and health industry. Two such surveys that have been carried out are Underwriting Watch and Claims Watch.
Previously these publications have run separately, however, on this occasion we felt it was important to join them together, to further understand and explore the full end-to-end customer journey.
Not only do we wish to get a current snap shot of what is happening across the markets, but also to combine the findings with previous years to see what has changed, or in some cases, what has stayed the same.
Thanks to the support of our clients, Underwriting and Claims Watch surveys have been running for well over a decade. Over that time the surveys have provided valuable insights into the incredible changes in the way insurers go about their business and, more importantly, how they interact with customers. The protection industry continues to change rapidly, with reports of predictive models and data analytics replacing some elements of underwriting and claims assessments.
So, let's take a look at some of the top trends we have observed over the last 10 years:
- Better disclosures
- Data gathering improvements
- Medical spend reduction
- Increased automation
FASTER UW AND CLAIMS DECISIONS
Underwriting and claim assessments are now being dealt with more quickly meaning the whole end-to-end journey is much shorter, a real win for customers! So how has this been achieved?
Dynamic insurers have been using their underwriting and claims experience to leverage knowledge on their processes and technologies, enhancing their capabilities.
Better Disclosures and Data Gathering
Firstly, process improvements are driving innovation through smarter and more effective question sets at the application stage. This has encouraged customers to disclose their medical history more easily and accurately. Simple changes such as picking up the phone and talking to customers directly have reduced the need for costly and more time-consuming requests for medical evidence. Often talking to customers directly alleviates the need to spend money on a GP report or causing unnecessary inconvenience to customers by sending them for an unnecessary medical with invasive blood tests.
While customers are receiving their policies more quickly at the start of their protection journey, it's another positive to see claim payments improving at the end of the process. The payment speeds for claims on all cover types have reduced on average by 23% since our 2014 survey. This has been achieved through improved tele-claims processes, with some insurers replacing the claim form altogether. Examples include online death verification, E-Signature technology and a greater use of customer supplied evidence. This has meant more targeted requests issued from outset, or even claims being paid at that point. Assessments are therefore much quicker, which is more great news for customers.
Medical Spend Reduction
In an economically challenging period, survival has been dependent on reducing costs and maximizing productivity whilst keeping the customer's needs at the forefront. Underwriting has shifted for many insurers by requesting less invasive testing in favour of obtaining more targeted GP reports, and where possible, obtaining reports electronically. The average cost of obtaining medical evidence has therefore plummeted by 25% since 2009, allowing more spending power for future innovations.
Automation and Technological Advances
The ongoing development of online interactions, automation via rules engines and changes in risk appetite, have transformed the speed of the underwriting process too. 10 years ago, it was not unusual to see it take up to 4 days to underwrite an application, to which you could add weeks or even months of delay in obtaining additional medical evidence. The latest data shows an average of 72% of applications are underwritten within 24 hours. Applications going through automated underwriting have almost doubled from roughly 31% to just under 60%. Some companies report their customers are receiving real-time decisions on up to 84% of applications received. As customers and advisers continue to demand faster responses to applications, there is a need to keep these innovations under constant review. The UK and Ireland markets are hugely competitive, and the price of insurance is reflected in that. To sustain that position long-term, for the benefit of consumers, it is important that underwriting standards remain robust. There is a general desire to be less reliant on medical evidence and a greater appetite to make decisions at the point-of-sale. The application of insightful data, allied to expert knowledge of medical and societal trends, will become increasingly important.
WATCH OUT FOR THE FUTURE
Work still needs to be done to further streamline processes. While more decisions are being automated, the level of evidence per application remains static despite medical spend reductions. With more applications being automatically accepted, you would also expect that those quick decisions would be more readily placed on the books, but surprisingly the rate of applications 'not taken up' has also remained static at an average of 24%.
Across the globe we see the ever-smarter use of data to drive decisions in underwriting and claims philosophy as well as for risk appetites. So, while online rules systems have enabled companies to leverage data to improve the way they serve their customers, those innovations will need to continue in order to remain competitive. The application of data analytics and predictive modelling, together with behavioural economics and technical expertise is becoming the norm in some underwriting and claims teams. Of particular interest is the consideration of non-traditional items of data that may be of relevance to how cases are underwritten, and claims managed in years to come. Will application forms be replaced by data from mobile health apps and wearable devices? Regulatory issues may present one of many challenges, but technology presents many future opportunities.
Contributors to our Watch studies continue to derive value from the benchmarking and insights that the studies provide. They, and subsequent discussions, draw on quantitative data and the qualitative inputs of industry experts. We recognise that the extraction of data has not always been easy, especially for those companies bringing together information from a combination of IT legacy systems. We are very grateful for your efforts in helping produce the Watch studies.
We are very grateful for all your contributions and we look forward to the quality conversations on the information the Watch studies generate. We hope the Watch studies continue to help you and your customers.