So You Want to Buy a Life Insurance New Business and Underwriting System

Life insurers are working in a post-pandemic world. Many, if not most, insurers made major investments in reaction to COVID-19. Celent saw significant reevaluation of underwriting processes and nvestment in automated underwriting tools. There was a shift away from paramedical exams (parameds) to fluidlessunderwriting, a desire for more consistency in underwriting decisions and the ability to look at more data points, whether from external data sources, or using technologies like machine learning to mine their own data.

As mentioned in Celent’s 2022 new business and underwriting system report[1], implementing technology that automates new business and underwriting functions helps insurers digitize their new business and underwriting, reduce unit costs, and improve margins. Automated underwriting processes significantly improve the client experience because they enable a faster, digital purchase experience—an expectation that grew exponentially during the pandemic.

Through the use of technology and products that allow for automated underwriting, insurers can improve the buying experience and attract new insurance customers. This is especially true as insurers try to attract younger buyers that are not yet convinced of their own mortality. More and more insurers have been developing products that allow for data-driven analyses of risk because the technology and tools that support these products are in reach of even the smallest insurers. These systems also integrate with a growing list of data providers that expand underwriting analysis beyond the historical risk evaluation. Underwriting algorithms increasingly are relying on artificial intelligence and machine learning to improve underwriting outcomes.

The new variable is the increased use of both traditional artificial intelligence (AI) and Generative AI (GenAI). GenAi is particularly powerful to review and summarize large volume unstructured data. One of the best examples of such a document is the attending physician statement (APS), the backbone of life insurance. That said, the goal is to move away from the APS to other forms of public data that are more timely and often less expensive.

All these changes are streamlining the underwriting process using data and technology to make the life insurance sales process more appealing to consumers.

Based on our research of new business and underwriting systems worldwide, Celent has created a primer to help decision-makers identify what is important to them in a new business and underwriting system selection. These solutions typically include an underwriting rules engine or an underwriter workbench. Some include both. Also available might be a rules based eApplication tied to the underwriting rules engine.

This report provides valuable insights to help insurers make informed decisions as they look at new tools to manage their changing underwriting processes.

New Business and Underwriting Conceptual Diagram

Source: Celent

[1]New Business and Underwriting Systems: North America Life Insurance Edition, 2022 xCelent Awards, Powered by VendorMatch