Hot Notes Interview: Consumer Health Data in Life Underwriting
The following excerpt is taken from an interview with Hank George in the April 2022 edition of ‘Hot Notes’. To read the full issue visit www.insureintell.com/hot-notes
I continue to be impressed with how electronic medical records contribute to prudent underwriting enhancements. Fact is, their role is much broader than I realized.
Because Human API is one of the leading providers of these records I asked their VP of Product Nate Seaman for his thoughts on 5 questions.
These are Nate’s replies to my questions:
What’s Human API’s reaction to the initial findings that mortality rates have exceeded actuarial projections since the pandemic started?
It was not surprising that mortality is up, based on what we all witnessed the past two years. However, it was surprising to hear how much mortality has increased beyond carrier expectations. What we took away from this covid mortality research was that there is a need, now more than ever, to understand if and how the mortality make-up of a carrier’s book of business has shifted over time.
We believe that in-force policy risk analysis has not been investigated as much as it could be. If there has been a large change, it may be necessary to make changes to new business underwriting, reserves or other risk management programs. While intense changes to an existing book of business might not be possible, there are ways to compensate if in-force assessments reveal a larger pool of risk than expected.
What can carriers do to gain insights into how their mortality has diverged from expectations?
In-force risk assessment is the idea that you can continually underwrite or assess the risk of your current book of business. It entails collecting data on current policy holders to examine if their amount of risk has changed since initial underwriting. In-force risk assessment gives carriers the opportunity to make adjustments to other areas of their business to make sure they are running optimal operations. And this re-gauging of risk is not assuming that carriers would only find excess risk. Examining the amount of current risk in your book of business could reveal a less risky population than expected, allowing you to free up reserves and invest in new areas. Overall, it comes down to two simple ideas:
Is it possible or even likely that actual mortality has drifted from what models predicted and
If so, would an updated view of risk allow a carrier to make better decisions going forward?
We believe for many carriers the answer to both those questions is “yes”.
How would a carrier actually put this in place?
There are a few steps required to reassess risk exposure; first implement an engagement platform that incentivizes policyholders to engage and authorize the sharing of their health data. Then leverage sampling or an automated risk score to re-underwrite a block of cases and see how that risk has evolved. Finally, carriers can take several courses of action based on what they find from their reassessment.
To collect the data necessary for in-force management, the policy holder needs to be engaged with the carrier. Carriers are already using platforms such as Sureify to create engagement programs with their policy holders. Once a system is in place, carriers can employ different types of incentives to motivate policy holders to participate. Life insurance carriers have a massive impetus to actively be involved in the health of their policyholders.
This leads to the next step, implementing a course of action. If an adverse population was found in a carrier’s book of business, the carrier would then have the opportunity to engage with those at-risk policy holders to lower their risk. By doing this, the collective book of risk is lowered, improving a carrier’s financial wellness, while also building a stronger bond with policyholders. In addition, carriers can adjust their reserve requirements up or down based on this risk assessment or revisit existing risk programs and models to increase or decrease risk tolerances.
Why would a policy holder agree to share their health information?
Although this interaction with policy holders is new to life insurance, it’s common practice for health plans and integrated health systems who engage in a host of programs focused on managing and improving the health of the highest risk populations. For example, companies like Omada Health and Livongo offer services to improve the health outcomes of people with chronic conditions and reduce their cost to health plans. These health plans have found material financial benefit from actively managing the risk in their book of business. Implementing a system of client interaction has benefits other than risk collection and management, including brand awareness and client satisfaction.
I thought you were totally focused on underwriting. How does this fit in with what Human API does?
We’ve built a platform around the idea that when you enable people to share their health data where they see it providing value, it will spur innovation in health. Connecting the consumer with their health data, allows carriers to interact with this data at every stage the consumer enters, including the in-force stage. We believe that consumer’s health data is not just valuable at the beginning of the relationship between life insurance carriers and the consumer, and that making this data accessible benefits both parties.
