Accelerated Underwriting in Life Insurance: Trends and Insights

A recent survey by Gen Re reveals that nearly 59% of life insurance applications in the U.S. are now eligible for accelerated underwriting processes. The study, which involved 30 life insurance companies and covered over two million policies totaling $827 billion, highlights diverse stages of transformation in underwriting workflows among various insurers. The survey underscores the dynamic regulatory landscape, illustrating how carriers adapt underwriting processes amidst evolving industry standards.

Goals of Accelerated Underwriting

The primary objective for adopting accelerated underwriting, identified by 52% of carriers, is reducing the time required to issue policies. Furthermore, 45% of insurers focus on managing mortality slippage, while 41% aim to boost sales. Progress towards these objectives is significant, as 72% of companies indicate they are meeting their underwriting targets, with 21% surpassing expectations. However, a few carriers report a shortfall in meeting goals, which brings attention to risk management strategies and regulatory compliance requirements.

Regulatory Compliance and Industry Trends

Pre- and post-issue auditing tools are prevalent, with 86% of participants utilizing or planning to adopt these measures, although 14% are yet to implement them. This aligns with emergent regulatory developments concerning the management of underwriting outcomes and the surveillance of in-force policies, especially when reinsured offshore. Actuarial Guideline 55 (AG 55) is noteworthy, influencing asset adequacy analysis for reserves by 2025 and necessitating updates in cash-flow testing for ceded business.

Sustained Growth in Life Insurance Sales

Estimated mortality slippage largely ranges from 6%-15% for most surveyed carriers, emphasizing the importance of cycle times and expedited underwriting processes. This is crucial as carriers experience heightened sales volumes, adding pressure to underwriting operations and claims management. Aligning with these industry trends, preliminary data from LIMRA indicates a 16% rise in U.S. individual life insurance sales, with new annualized premium reaching $4.3 billion in Q3, alongside a 10% growth in policy count. Notably, underwriting automation drives this surge in term insurance activity