Unlike simplified issue insurance, traditional accelerated underwriting also offers the possibility to obtain insurance without medical exams or bodily fluid tests.
Although a thorough risk selection process is necessary for accelerated underwriting compared to simplified issue, it allows for high insurance amounts to be underwritten.
Since the mid-2010s, major insurers have been racing towards increasingly higher insurance amounts without examinations or tests, heavily utilizing predictive models based on claims data analytics.
Among the leaders in offering accelerated underwriting, Manulife is willing to insure individuals aged 0 to 50 up to $5 million for a 10-year term in its Family Term and Family Term – Vitality Plus products, according to information provided to InsuranceINTEL, a Canadian life insurance product monitoring site.
Competitors are pushing their limits. RBC Insurance has announced the creation of an express underwriting team, as reported in the February 27, 2024, edition of InsuranceINTEL Weekly, a publication from the Insurance Journal Publishing Group. This underwriting team is tasked with handling cases that do not require fluid sampling, and the insurance coverage is less than $2 million.
RBC Insurance aims to reduce the cycle time from the date of application to policy issuance to 8 days or less. Since the team's creation in November 2023, the insurer says it has reduced this time to 6 days or fewer.
“We had one case in January that was received, approved, issued and settled all in the same day,” stated Russ Shaw, Senior Director, Life and Living Benefits Underwriting & Operations at RBC Insurance. “Someone woke up with no coverage and went to bed insured. That’s a goal we’d like to meet more often.”
The February 27, 2024, edition of InsuranceINTEL Weekly reported that RBC Insurance’s express team had issued 1,745 policies to date and settled 1,720. Of the settled policies, 51 per cent were completed within 24 hours of their issuance. A settled policy is one that has been issued, accepted by the client, and for which the first premium has been paid.
The insurer said that its underwriters have been able to make a decision in 55 per cent of cases they reviewed without requiring additional information or requirements.
Reducing frictions
BMO Insurance announced improvements to its accelerated underwriting process on February 26, 2024. It simplified its requirements for new life insurance applications. People ages 18 to 40 can now apply for life insurance coverage up to $5 million without undergoing additional testing. The maximum coverage is $3 million for individuals ages 41 to 50, and $750,000 for those ages 51 to 60.
"Investing in our data and analytics has been an important strategic driver for us over the past few years. Eliminating bottlenecks in the underwriting process has been a key part of our modernization effort," stated Rohit Thomas, President and CEO of BMO Insurance, when announcing these changes. He adds that these changes will help financial advisors save time "and ensure consumers can get coverage in place faster and with less paperwork than ever before."
It removes friction from the life insurance buying process – Rohit Thomas.
During an interview with the Insurance Portal, accompanied by BMO Insurance's chief underwriter, Katarina Nikolic, Rohit Thomas underlined that BMO Insurance offered accelerated underwriting up to a maximum amount of $500,000 before the pandemic. When the pandemic hit in 2020, BMO Insurance raised the limit to $1 million, and then to $2 million in 2021.
"It removes friction from the life insurance buying process," summarized Thomas regarding the newly announced requirements and life insurance limits for 2024. He believes the changes help advisors connect with their clients. "BMO Insurance is continuously looking at making the insurance purchasing process quicker and easier for advisors to get the coverage their clients need in place, with the least amount of friction,” he said.
He also believes that raising the limits will enable them to cover a significant part of the BMO Insurance market. "We are continuing to focus on the large case producers by raising their product caps on their Whole Life products. They are well positioned in that market,” said Thomas. He noted that accelerated underwriting is available for all BMO life insurance products, "as we aim to make insurance accessible to all Canadians."
Customer experience
Katarina Nikolic added that the new underwriting limits will reduce cycle times. "The new accelerated underwriting limits will reduce cycle time by requesting evidence only when necessary and using targeted questions based on an individual’s unique risk profile. It could be medical questions, financial questions or lifestyle questions,” she explained. Nikolic clarified that these would involve only medical, financial, or lifestyle-related questions.
According to Nikolic, the new requirements and underwriting limits will both reduce delays and improve customer experience. "We hope to decrease our cycle time by over 50 per cent," in comparison to the traditional underwriting cycle she estimates at 30 days on average. "BMO Insurance has streamlined the buying process for the Canadian consumer by having a digital end-to-end onboarding solution with their E-application, accelerated underwriting and electronic delivery capabilities," added Nikolic.
She took the opportunity to clarify the difference between accelerated underwriting and simplified issue. “All our Life products are fully underwritten and we do not participate in the simplified issue space," she pointed out. Nikolic explained that simplified issue and guaranteed issue products are issued for smaller insurance amounts.
In contrast, accelerated underwriting focuses on the underwriting process, added Nikolic. "BMO Insurance is leveraging their underwriting rules engine and data analytics to fuel growth in their accelerated underwriting."
This article is a Magazine Supplement of the April issue of the Insurance Journal.