Manulife has announced it is streamlining its underwriting process so that many consumers need not undergo invasive testing. The insurer says that applicants between the ages of 18 and 40 no longer need to test for nicotine, or provide blood, urine and other biometric data for policies up to $1 million.
Instead, a predictive analytics program will assess those applying for a policy and whether they are suitable for coverage.
Karen Cutler is the chief underwriter at Manulife and a real proponent of how this technology is changing the industry.
“Through predictive analytics we understand our business better than ever,” she says. “We expect to use analytics and modeling with our living benefits products in the future, but right now we are focusing on life insurance.”
The testing exemption does not apply to those with chronic medical conditions, such as heart disease or diabetes, but there has been some leeway for applicants above the age of 40.
Customers between the ages of 41 and 69 applying for up to $5 million in coverage no longer require an electrocardiogram (EKG), while those aged 70 and over applying for coverage up to $10 million now only require a resting EKG (previously a stress EKG was required).
Another area that Manulife and the industry in general are using analytics is to combat insurance fraud. Canada’s main providers have collected huge amounts of data amassed over generations. This allows them to zero-in on applications where veracity can be called into question, as Cutler explains.
“The majority of people do provide full disclosure on their insurance applications,” she says. “One of the biggest challenges we have found in North America over the years has been the issue of smoking disclosure and tobacco use. We use analytics to identify the people that have high probability of being a smoker. Because of that, we need to test those people before offering insurance.”
The digital revolution is really starting to take shape in the life insurance space and this makes for a better, more efficient business, says Cutler. Impediments to buying life products have long been a bugbear of consumers, so the fact these barriers are being removed will benefit everyone concerned.
“We have launched electronic applications with electronic signatures and that is where the industry is headed at a really fast pace. The digitization of underwriting is one issue, but the ability to take that information and use analytics to help us make the customer experience less invasive and time-consuming will better meet their expectations.”
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