The technologically-conservative North American life insurance industry is finally recognizing the value of automated underwriting platforms.
So says a new report, “Automated Underwriting for Life Insurance: Lighting Up the Scoreboard,” from
“Automated underwriting solutions are gathering steam and credence with North American insurers, and a substantial number of insurers have put muscle and money into their capabilities in order to deliver policies in a cost-effective manner to the vast and collectively underinsured middle market,” said Clark Troy, research director with Aite Group and author of the report. “To that end, many insurers have entered into agreements with providers of automated underwriting solutions for life insurance, and the North American insurance market shows signs of accelerating further into the 21st century.”
The report is based on 40 conversations with vendors of solutions and their customers; operational counterparties at insurers, reinsurers, distributors; consultants who have experience implementing and evaluating the solutions and vendors of complementary solutions such as electronic applications and paramedical services. Vendors profiled in the report include Accenture, Allfinanz, CSC, DJG Associates, Hannover Re, Infosys-McCamish, MajescoMastek, PlanetSoft, Polaris Software, Resonant Insurance Technologies, RGA, Step Solutions, StoneRiver, Swiss Re, Tata Consultancy Services, and Transamerica Re.
Troy told INN that the hallmark of the report is the discovery of the various types of services coming online that promote automated underwriting. These services, says Troy, successfully address key challenges experienced by life insures, such as how to successfully embrace the consumer middle market while overcoming the high cost of cycle time, and motivating the agent sales force to sell into this market, which typically does represent larger commissions.
Aite Group says that since the mid-1990s, automated underwriting solutions have grown increasingly sophisticated in terms of their user-friendliness and ability to process the types of underwriting data available to them.
“New types of data services and offerings are reconfiguring the landscape,” Troy told INN. “There is a convergence between traditional software providers and reinsurers, who have been marketing underwriting solutions for a long time. These partnerships are resulting in best-of-breed offerings that U.S. insurers are seeing as advantageous.”
These solutions hold a great deal of promise for insurers in reducing costs, expediting application cycles, decreasing not-take-out rates, and making it easier to sell policies and reach the underinsured middle market. Nonetheless, North American insurers, generally technologically conservative, have been slower to adopt them than have their counterparts in the U.K., Australia, South Africa, and emerging markets.
