Not to be confused with simplified-issue individual life insurance, accelerated underwriting allows customers to avoid examinations and blood tests when purchasing a traditional whole life, universal life or term life insurance product.
In its infancy in the mid-2010s, accelerated underwriting pushed its limits, growing from offering coverage in the hundreds of thousands of dollars to several million dollars today.
The offering available for ages 18 to 45 is particularly tempting, according to research carried out by the Insurance Portal and the InsuranceINTEL product information centre. For example, these young clients could obtain up to $5 million in whole life insurance coverage with no physical examination or fluids taken at Canada Life, Manulife and Sun Life.
With accelerated underwriting, we want to still be able to get the same predictive values that you would get with normal underwriting - Marc Giguère
In all, eight insurers offer accelerated whole-life underwriting. In addition to the big three, they include Assumption Life, Desjardins Insurance, Empire Life, Equitable Life and iA Financial Group, for smaller amounts of coverage. Co-operators Life, Foresters Financial and RBC Insurance do not offer it.
BMO Insurance joins the big three insurers in offering accelerated-rate insurance up to $5 million, for ages 18 to 45 with universal life, and for 18 to 40 with non participative whole life and term 100. Ten out of 12 insurers offer accelerated pricing for universal life. Eleven out of 16 insurers offer accelerated term insurance underwriting. RBC Insurance is one of the insurers offering accelerated underwriting for universal life and term insurance.
A reinsurer’s perspective
According to reinsurer Munich Re, accelerated underwriting for individual life insurance is not slowing down. Insurance Portal conducted an exclusive interview with Munich Re US CEO Marc Giguère and Munich Re Canada Senior Vice President (Life) Michael Correa.
The multinational reinsurer has access to a large pool of data to support accelerated underwriting. “We’re extremely focused on getting and using external data to do faster and better underwriting,” says Marc Giguère.
Underwriting could be done even faster, he says, but at a higher price in terms of premiums. “With accelerated underwriting, we want to still be able to get the same predictive values that you would get with normal underwriting, to be able to offer competitive pricing,” explains Giguère.
He points out that the insurer can obtain data from electronic health records, if the customer authorizes it. He says customers may decide to give their authorization to simplify the insurance purchasing process. Other information can be obtained without authorization, for example from public demographic databases, he points out.
To turn data into fuel for accelerated underwriting, Munich Re employs its Alitheia tool, supported by artificial intelligence, among other things, mentions Giguère. The reinsurer also uses a platform capable of summarizing an electronic health record, called Automated EHR Summarizer. This platform can “summarize a 100 PDF page electronic health record into a three-page report for the underwriter,” he says.
Canada to follow
Alitheia is coming to Munich Re Canada, says Michael Correa. “The intention is to bring the full capabilities of this tool to Canada. We are looking at what Munich Re US is able to accomplish in accelerated underwriting,” he reveals.
Access to third-party data is limited. Today, it's not where it should be. - Michael Correa
“Canada is different in the way we achieve faster and better underwriting,” he adds. “We can access the Medical Information Bureau (MIB) or motor vehicle records. There’s limited access to third-party data. Today, it’s not where it needs to be.”
To facilitate the arrival of Munich Re's U.S. tools, Correa says he is partnering with organizations that would have the potential to create in Canada “the same kind of third-party data environment that we see in the U.S.,” he adds.
Accelerated underwriting by the numbers
According to data provided by Marc Giguère on the results of accelerated underwriting in the United States:
- 73% of applicants are eligible for accelerated underwriting, on products that offer it;
- 63% of eligible applicants receive an accelerated underwriting decision;
- 50% of eligible applicants receive an insurance offer via accelerated underwriting.
Mike Correa points out that the corresponding figures for Canada “are about 10% to 20% lower than shown in the table for the US,” shared by Marc Giguère during the interview. “This is partly because of the different approach in Canada, but also because less than two-thirds of Canadian companies have an AUW (accelerated underwriting) program,” adds Correa.