The Evolution Of Underwriting

Making Life Insurance Work Today

A new and radical approach to risk assessment

by Heather Majewski and Shelly Habecker

Ms. Majewski is Head of Life & Health Solutions and Ms. Habecker is Strategy & Innovation Manager at Swiss Re. Visit

Modern middle Americans are looking for ways to keep off the extra pounds, pay the bills as they age, and stay safe during a pandemic where so much of life has moved to the virtual realm. As the 2020s get underway, life insurance innovation is being profoundly shaped by the continuous evolution of customer risks and their expectations for a personalized customer experience with digital access to all goods and services. The global pandemic has also served to awaken customer demand for protection products that are right for them.

As a result, the middle market needs new and more relevant life insurance products that: 1) reward health and wellness, 2) insure the cost of aging, and 3) allow them to access products faster and more efficiently in virtual spaces. Working within a variety of ecosystems, forward-thinking carriers and tech-savvy distribution partners are joining us to bring new product ideas to life in these three areas in order to grow their businesses profitably and address new customer demands brought by the pandemic.

Rewarding Health and Wellness

This scene is familiar to many modern middle Americans: they drive to work, sit all day at a desk, drive their kids to their activities where they sit and watch, and then eat processed food because they are too busy to shop and cook something nutritious. Perhaps it isn’t so surprising that in just under a decade, the number of obese Americans increased from 30.5% to 42.4%.[1] This obesity epidemic correlates to other diseases such as heart disease, stroke, type 2 diabetes, and certain types of cancer that can be improved or prevented by individuals who take action to improve their diet, exercise, and lifestyle.

Meanwhile, mental health conditions are also on the rise, in many cases exacerbated by the COVID pandemic. In the US, mental health care costs reached $225 billion in 2019, accounting for nearly 5.5% of all health spending and representing a 52.1% increase since 2009.[2] While some demographics are impacted more than others by these risks, all individuals stand to benefit from efforts to encourage health and wellness, and here in lies opportunity for life and health insurers.

Swiss Re has observed three main trends propelling life insurers toward product innovation that rewards healthy lifestyles. First, we see a growing number of health and wellness platform providers emerging who want to partner with insurance companies to engage customers around their health and create differentiated products to be delivered through their platforms. Secondly, these platforms make it possible for customers to provide access to additional information on their health through API calls to their wearable devices and electronic health records (EHR). Thirdly, ongoing engagement with customers enables life insurers to rethink how they underwrite, paving the way for dynamic underwriting and pricing models so that they can offer more protection to customers while providing continuous engagement to improve their health.

Supporting this innovation, Swiss Re is breaking new ground by combining lifestyle data and existing models with our history of underwriting expertise to propel the insurance industry forward.[3] Whereas traditional underwriting based on indicative factors like age, build, and blood pressure provide the insurer with a snapshot of the customer’s risk profile at a single point in time, our new approach to integrating lifestyle data into underwriting decisions will give life insurers a more holistic view of customer risks as they evolve over time. Specifically, the lifestyle data that Swiss Re is incorporating into the underwriting experience includes sleep, exercise, nutrition, mental wellbeing, the environment (e.g. frequency of exposure to harmful elements), and substance use – what we refer to as the “Big Six.”[4] The challenge for life insurers is to rethink customer journeys and products to fit this new underwriting paradigm. That’s where Swiss Re can enable carriers and wellness platforms to co-innovate insurance products that will help the middle market manage their physical and mental health more effectively.

Insuring the Cost Of Aging

Growing old is expensive. Every day, 10,000 Americans turn 65, and between 2014 and 2040, the number of older adults in the U.S. is expected to leap from 14.5% to 21.7% of the total population.[5] These emerging senior citizens need medical care and Long-Term Care services, but who pays the cost? U.S. government-funded Medicare provides basic coverage, but it does not cover everything. Starting in the 1980s, private insurers began selling supplemental Medicare insurance (also known as MedSupp, MediGap, or Medicare Advantage plans) to fill the gap. By 2020, 39% of the Medicare population was registered for a Medicare Advantage plan.[6] This business is projected to only grow with number of people age 65 and older enrolled in Medicare expected to increase from 52.7 million in 2019 to 75 million by 2028.[7]

In addition, Medicare does not cover Long-Term Care (LTC) expenses, which creates an additional protection gap. Medicaid has become the de-facto government funded LTC provider, but only for those who meet low-income requirements or spend down their life savings, which is not ideal. As a result, stand-alone LTC insurance products gained popularity for a while, but fell off dramatically in 2005 when many companies recognized that these products had been mispriced, which eroded profitability and caused insurers to exit the market.[8] Hybrid LTC products took their place, but they remain out of reach for many in the middle market, who lack sufficient investable assets to afford them.

In this context, Swiss Re sees two main opportunities for product innovation to cover the middle market’s cost of aging. The first is a differentiated, end-to-end MedSupp offering designed to enable carriers to quickly expand their existing customer base. The second are “combination products” that have low or no-cost Accelerated Death Benefit (ADB) riders for Chronic Illness or LTC expenses, attached to Index Universal Life products. Customers perceive these products as a more economical use of their assets because they meet multiple needs through one product, including 1) death benefit, 2) supplemental retirement, and 3) chronic illness or LTC coverage.[9] However, the challenge with these products is that customers typically have to choose which of the three benefits to maximize. In this regard, Swiss Re is developing ways to preserve LTC coverage without dramatically eroding the customer’s death benefit or retirement income.

Partnering With New Digital Distribution Platforms

Whereas traditional underwriting based on indicative factors like age, build, and blood pressure provide the insurer with a snapshot of the customer's risk profile at a single point in time, our new approach to integrating lifestyle data into underwriting decisions will give life insurers a more holistic view of customer risks as they evolve over time...

Virtual interaction is key for attracting and retaining customers, especially since the COVID pandemic hit. Winning carriers are rising to the occasion by upgrading their IT systems, automating underwriting processes, unlocking the power of existing data through wearables and EHR, creating online customer portals, and delivering all manner of documents electronically. Also stepping up to the challenge are insurtechs and startups who regularly approach our Life and Health Solutions team at Swiss Re with new platform and product ideas as described above.

In addition, they create opportunities to access new demographics that have previously been underserved by the life insurance industry. For example, at Swiss Re, we have developed a product for immigrants that meets their need to cover the cost of family funerals in the US and abroad. A digitally enabled distribution company that understands the needs of cultural groups is training agents to sell this product within their own communities. The possibilities for selling life insurance to affinity groups like this are huge. We should view digital platforms that serve the LGBTQ community, mothers, gig workers, and many other groups as fertile ground for life insurance product innovation for new customers.

In addition, we see opportunities to expand the reach of existing products by going digital. For example, we have partnered with an insurtech that sees the value in improving the advisor experience. Working together, we’ve created a digital experience that allows an advisor to manage their entire book of term-life business on the go. The platform delivers targeted results and features an easy-to-track commissions dashboard. Whereas in the past, agents were more likely to focus on higher net worth customers given the long process involved in buying life insurance, this new innovation will make it easy for advisors to sell lower face amount policies to the middle market at scale. This digital platform also opens opportunities for property and casualty agents and other non-traditional distributors to easily sell life insurance.

Meet the Middle Market Today!

Life insurance product innovation takes bold efforts to test and learn. Innovative carriers, distribution partners, and reinsurers working within evolving ecosystems must meet the needs of the modern middle market in America as their mortality and morbidity risks evolve. Together we can enable faster and more efficient ways to sell new and more relevant products digitally. The opportunities to reward health and wellness, to provide insurance coverage to an aging population, and to partner with new digital distribution partners will only grow in the coming years. Let’s take charge of change today and move the industry forward together!




1 Adult Obesity Facts | Overweight & Obesity | CDC
2 2019 U.S. Mental Health Spending Topped $225 Billion (
3 Lifestyle factors: The new frontier for risk assessment | Swiss Re
4 “The Big Six” Lifestyle Factors | Swiss Re
5 United States |
6 A Dozen Facts About Medicare Advantage in 2020 | KFF
7 Forecast Summary 2019-2028 FINAL (
8 Carl Friedrich, Milliman: “Long Term Care Insurance in the US.”
9 2020 Insurance Barometer Study (, page 22