The Emma digital platform has created a new accelerated underwriting engine that allows it to extend the amount of life insurance it offers online without medical exams or blood tests to $750,000. The new limit applies to individuals whose health history is not perfect but who are in good health.
Using traditional underwriting methods involving medical exams and blood tests, the insurance technology (or “insurtech”) company is able to provide up to $5 million in coverage.
"We already had the ability to make instant decisions for up to $1.5 million, provided the applicant was in excellent health. A minor health issue and the application would go to manual underwriting," reveals Félix Deschâtelets, President and CEO and co-founder of Emma, in an interview with the Insurance Portal. It is these cases that can now benefit from accelerated underwriting up to an insurance amount of $750,000.
Emma is a digital broker whose advisors interact primarily with clients through its website. The company was able to build the engine thanks to a collaboration with Humania Assurance. The insurer also underwrites Emma's in-house products.
Although they are sold mainly in Quebec, Emma's products are also available outside the province. Occasionally, “up to 50% of our sales come from Ontario,” says Deschâtelets, which was not the case just a few years ago. Currently, Emma generates an average of 30% to 40% of its sales outside Quebec.
Close collaboration
The insurtech company developed its accelerated underwriting engine based on questions asked to Humania's underwriters, as well as an analysis of the insurer's pricing guide and past decisions. “A 35-year-old parent in good health can now obtain $750,000 in coverage in less than 10 minutes,” says Deschâtelets.
Emma distributes term insurance policies of various durations, ranging from 10 years to 35 years, or even 100 years (T100), including disability riders, cancer riders, and life insurance riders for parents or children.
Humania assumes the risk of Emma's accelerated underwriting engine decisions. The technology behind it belongs to the insurtech.
Harnessing data to go further
The insurtech calibrated its tool by identifying the profiles of people to be insured who most often require “manual assessments that slow down the risk selection process,” explains Deschâtelets. “We had a basic algorithm, but we wanted to go a step further, and that requires data when you want to innovate.”
A few thousand policies later, processed by this system, Emma was able to form an opinion. The company accumulated data on manual intervention by underwriters, processing time, and the type of medical conditions that required additional questions. “We were able to identify cases that are extremely costly to the insurer, the reinsurer, and ultimately the customers because these costs are passed on to them,” he says.
Emma was thus able to identify cases where sub-questions helped speed up the verification process. The insurtech company realized that it could offer insurance coverage of up to $750,000 for all of its products. Deschâtelets says he has identified “certain health issues and cases of comorbidity for which the pricing engine will speed up decision-making,” without divulging any further details about his formula.
For their part, insurance company underwriters can offload certain routine checks. “This saves the insurer a lot of money. We will be able to continue to offer competitive premiums (insurance prices),” he notes.
He maintains that Emma regularly ranks among the top three lowest rates on the term insurance market and is number one for 100-year term insurance (T100) for 25- to 35-year-olds, particularly for non-smoking women in that age group.
Up to age 80
Emma believes it stands out by offering accelerated underwriting for policyholders up to age 80, says Félix Deschâtelets.
According to the InsuranceINTEL database, the life insurance product information centre of The Insurance Journal Publishing Group, the age limit for accelerated underwriting for a $1 million policy is 60. Beyond that age, the amounts covered by accelerated underwriting decrease and are lower than those offered by Emma.
For example, Canada Life and Sun Life offer accelerated underwriting beyond age 60 for a maximum amount of $100,000 in whole life insurance with dividends. Their limits are 69 and 70, respectively. An amount of $750,000 can be purchased under accelerated underwriting with BMO Insurance's 10-year term policy, but only between the ages of 51 and 60.
Customer experience and AI
Félix Deschâtelets points out that the new engine developed with the help of Humania Assurance allows him to offer “much lighter processes in terms of customer experience.”
Deschâtelets believes that artificial intelligence (AI) can further enhance the customer experience. "We are starting projects with artificial intelligence. We will be able to tell the underwriter right from the start what kind of decision they should make, or what aspect they should focus their efforts on to speed up decision-making and standardize the customer experience," he adds.
In some cases, AI can achieve certainty rates above 95%, or even 100%, he says. “We will be able to make decisions automatically using artificial intelligence,” says Deschâtelets.
Among other things, Emma tends to take people at their word when it comes to the answers they provide in their insurance applications. “The pressure to protect loved ones and ensure they have the money to get through their grief makes people all the more honest,” he observes. For example, he reports that over the past ten years, the industry has seen a high rate of accuracy in responses to questions about drug use.
