Life Insurance Underwriting (R)evolution in the Age of the Internet of Things

by Tom Scales, November 24, 2014
Global, North America

Abstract

Life insurers have underwritten prospective insureds using the same information and methodology for generations. In this report, Celent looks at an approach called Post-Issue Underwriting. The question is whether information available from new sources, including wearables and implantable sensors, would enable an insurer to perform continuous underwriting after the issuance of the policy.

Respondents to our survey weigh in on the validity of the concept and the level of acceptance and benefit available in the industry and to the customer.

In addition the respondents shared their beliefs on what data would be appropriate and the level of trust they would place in various sources of data.

“Our research shows that insurers are interested, but perhaps not ready for the concept,” says Tom Scales, research director of Celent’s Life, Annuity, and Health Insurance practice and author of the report. “As wearables and sensors become more common, as Internet users age, it will be interesting to see if this changes.”

This 22-page report contains nine figures.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

2

Methodology

3

 

Respondent and Survey Demographics

3

Survey Analysis

6

 

Current Underwriting Criteria

6

 

Post-Issue Underwriting Criteria

7

 

Acceptance of Post-Issue Underwriting

8

 

Value Proposition

11

 

Challenges

12

Why Consider Post-Issue Underwriting Now?

14

 

Internet of Things

14

 

Marketplace Changes

14

 

Is There Really Value?

15

 

A Real Life Example

15

Summary

16

Leveraging Celent’s Expertise

17

 

Support for Financial Institutions

17

 

Support for Vendors

17

Related Celent Research

18

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