Decision engines have been used for underwriting life business for close on 40 years now. They have evolved from simple engines processing predominantly ‘clean’ cases into systems capable of assessing substandard cases (including some with multiple adverse risk factors) and using information from external databases in real time as part of the process. STP (straight through processing) rates of cases which require no human intervention, can, in some markets, be 80% or even higher, leaving scarce underwriting resources to concentrate on the more complex cases.
In 2011, SelectX, in conjunction with claims specialist Karin Lloyd, looked at the use of technology in the processing of claims. What struck us at the time was how little investment had been made into claims technology. One obvious tool that could be used was the technology that is used in an underwriting rules engine.
Consider these scenarios:
- Collecting basic data from an applicant ensuring that all fields are completed, seeking clarification and further details where needed by the use of drill-down questions
- Providing 24/7 availability for form completion at home at a time that suits the applicant, as opposed to during office hours only
- Collecting structured data to monitor trends and improve the effectiveness of questions and rules
- Enabling the applicant to receive an immediate decision on straightforward cases within certain parameters.
Place all of the above scenarios in a claims context and replace the word ‘applicant’ with ‘claimant’. Do you see where we are going here?
It is fair to say that some claimants will prefer the human touch that an experienced claims professional can provide. Fair enough. But some may find the ‘impersonal’ route of completing a computerised form easier to deal with at a difficult time.
Historically, when insurers have considered the benefits of implementing an underwriting engine, they concentrate on increasing the speed of decision making, improving consistency and processing more cases with the same or fewer resources. One of the most overlooked benefits of using an engine is data – data that can benefit an insurer on many levels from monitoring experience to portfolio management.
We believe all of the above benefits apply equally to the use of similar technology in processing claims. So, the question in our minds is: Why is it taking so long?
And surely there are still more opportunities to use some of the capabilities of a sophisticated underwriting engine in the claims arena:
- Identity checks
- Processing medical data and test results
- Using other external data sources
- Summarising physician reports or electronic health records.
In recent years, one or more reinsurers have invested resources in developing ‘claims engines’ with varying degrees of, mostly limited, success. Which is one of the reasons we have taken heart from a recent press release from The Exeter a UK friendly society.
The release talks about Exeter’s partnership with technology provider UnderwriteMe in order to implement a system which supports disability claims assessors in gathering information from claimants using a tailored question set based on the cause of the claim. It provides claims assessors with policy information, product features and exclusions. At the time of writing the engine will recommend an outcome, although the final decision will remain with the claims assessor.
Here’s what Simon Jacobs, Director of Business Development at UnderwriteMe had to say:
“The claims department is where the industry’s reputation is established. Automation provides various advantages, many of which are already seen in the underwriting process. These benefits include faster and more consistent decision-making, improved guidance for next steps, and reduced time spent on routine tasks, among others.
“However, it is important to note that automation does not imply the elimination of claim assessors or a ‘tele-claims’ approach to information gathering. On the contrary, assessors will have more fulfilling roles, focusing on assisting claimants with complex needs. Meanwhile, straightforward claims can be processed more quickly. This arrangement benefits both insurers and claimants, creating a win-win.”
All very encouraging. The claims department has always been the Cinderella character in the story of a life insurer. Maybe, finally, Cinderella will go to the ball?
