The Emergence of Holistic Planing

Pandemic Planning: Accelerating the Inevitable

Can we significantly shrink the protection gap?

by Chris Behling

Mr. Behling is Chief Underwriter, Life & Health Americas, Swiss Re. Visit

The COVID-19 pandemic created a confluence of events. Consumers have become more aware of their need for protection, while at the same time, circumstances have pushed life insurers and agents to adopt new approaches to sales and underwriting. Many of these changes were more consumer-centric and were under consideration for decades. In many ways, the pandemic “accelerated the inevitable.”

Our goal as an industry should be to maintain the positive momentum that has been created toward more consumer-centric and less invasive ways to responsibly sell and underwrite life insurance.

While it has long been said that life insurance is “sold not bought,” our industry has a significant opportunity to shrink the $25 trillion protection gap by helping turn consumers’ awareness of their need for protection into the actual purchase of protection.

Consumer attitudes and sales during COVID-19

Early data indicates that the pandemic has resulted in increased consumer awareness of the need for life insurance protection. But it is far less clear as to whether that increased awareness will translate into completed sales that help close the protection gap.

Despite reporting of “consumers panic shopping for life insurance in the face of coronavirus,” or general statements like “the demand for Life Insurance is up,” the data reveals a mixed bag.

Application volumes have fluctuated this year, and the future trend is unclear. According to MIB, application volume was up (in comparison to last year) until the end of March, at which time there was a significant decline. The decline continued through mid-April but stabilized by the end of the month. Application volumes in May bounced back up to the levels seen pre-COVID-19, and they are up on a year-over-year basis.

In terms of distribution and product mix, online sales have held steady or increased, while traditional face-to-face sales have been hard hit. Distributors focused on the ultra-high-net-worth market and niche markets (i.e. foreign nationals and company-owned life insurance (COLI)) as these have seen the biggest decline. The product mix has shifted toward term products at lower face amounts.

Some segments of the business have reported significant increases. According to the same LIMRA survey, while 46% of companies surveyed experienced decreased sales in March, 24% reported that online applications either increased or remained unchanged.

While there are exceptions, most carriers, regardless of the impact on overall volumes, have seen a shift in mix toward term sales. Among 42 life insurers surveyed by LIMRA, sales volumes in all product categories were down in May, except for term. But even with term volumes up in May, term premiums were down. So, while more term policies are being sold, total premium levels decreased.

Underwriting changes implemented in response to COVID-19

As the pandemic hit and social distancing guidelines were implemented, carriers faced challenges in underwriting. In response, many, if not most, carriers implemented changes in two areas:

  • Expansion of “fluidless” accelerated underwriting (AUW) programs, and
  • Leveraging alternative data sources.

Expansion of Fluidless AUW programs

Many carriers with existing fluidless AUW programs expanded their age and amount guidelines to support more business through these processes. While some carriers expanded their programs “as is,” others amended the programs by limiting eligibility and the classes offered.

While some carriers have chosen to limit their risk by limiting the offered classes to standard or better, other carriers have eliminated their preferred best class to offset some of the mortality cost associated with the program expansion. Still, others have added a table to all offers to make the program cost-neutral. While these expansions have been viewed favorably by distribution, anecdotal evidence suggests there have not been a lot of policies issued through the expanded programs. This is especially true of programs that were expanded above $1M. It is unclear why this is the case, but potential factors could be:

  • Less business is written between $1M and $3M, which corresponds to a significant part of the fluidless AUW expansion
  • Brokerage General Agencies (BGAs) and agents prefer to build the file on larger cases, ordering requirements themselves and packaging the case for consideration at multiple carriers
  • Fewer policies of larger size make it through the AUW process due to additional medical or required financial underwriting requirements

In instances where a table was added, or best class removed from these programs, it has been reported that agents chose to delay or deploy full underwriting to deliver a better rate class.

Expanding fluidless AUW programs has a cost and limiting tables to make up for this cost hinders the effectiveness of the programs. In addition, expansion of these programs has resulted in a relatively small number of sales.

These reasons suggest that simply expanding fluidless AUW programs may not be the most effective path forward to closing the protection gap.

Leveraging alternative data sources

Many carriers have also accelerated their use of alternative data sources. These data sources are used either within AUW programs, to support fully underwritten programs, or both. Examples of how new data sources are being used include:

  • Serving as a replacement for traditional non-electronic medical records, such as Attending Physician Statement (APS)
  • Serving as a replacement for insurance paramedical exams and insurance labs
While it has long been said that life insurance is "sold not bought," our industry has a significant opportunity to shrink the $25 trillion protection gap by helping turn consumers' awareness of their need for protection into the actual purchase of protection

Most carriers are using these alternative data sources in combination with Medical Information Bureau (MIB), Motor Vehicle Records (MVR), and prescription databases (Rx) data. Others are also using smoking propensity models and risk scores to determine what additional information may be warranted.

The use of alternative data sources is a promising development that has been accelerated by the pandemic. Leveraging these data sources has the potential of creating a much closer match to the information contained in a traditional APS. Therefore, it is not hard to envision leveraging these sources instead of an APS without experiencing significant mortality impact. Of course, use of (or requests to use) these additional data sources must be done in accordance with applicable law and regulation.

Charting a path forward

The life insurance industry should continue the movement toward more consumer-centric processes that have been created in response to the COVID-19 pandemic. Below are a few thoughts on how this could be accomplished.

The term “fluidless” underwriting is a misnomer. Our goal should not be to underwrite without fluids, but rather to determine when fluid test results will provide significant protective value. In cases where fluids are required, we should aim to get those test results in the least invasive, most consumer-centric way possible. The goal should not be to avoid fluids, but instead to avoid the need for exams, labs, and traditional APS.

To accomplish this, three major advances are necessary:

Underwriting based on the applicant, not the age and amount chart
We need to underwrite the individual and determine what information is needed based on the information we have. This means potentially moving away from “age and amount” grids and toward methods that better indicate when and what additional information is needed.

Robust data collection at the time of application is key. Leveraging e-Applications with reflexive Part Two questions, MIB, MVR, Rx, and other available and appropriate risk scores, can provide a solid starting point to determine what additional requirements are warranted. The goal at this point is to make as many offers as prudently possible with this baseline information.

Over time, insurers and reinsurers will get better at pinpointing sources which deliver the highest probability of returning the specific information needed. In the meantime, multiple data sources may be required to complete the picture.

Blurring the line between Accelerated Underwriting (AUW) and Full Underwriting (FUW)
We have seen that simply expanding fluidless AUW programs “as-is” has not yielded a large increase in consumer protection, and we know that these programs have a mortality cost. Therefore, the answer may not be expanding these programs “as-is,” while maintaining a distinction between AUW and FUW. Instead, the answer may be to blur (or eliminate) the lines between these two approaches. When the concept of acceleration is approached as the ability to underwrite quickly, inexpensively, non-invasively, and without APS, inflexible limits on ages and amounts of coverage that qualify become unnecessary – assuming that all of the information currently required is obtained using reliable alternative data sources. There are examples of applicants at the highest of ages applying for the largest of policies where complete medical information is available digitally and immediately.

For this vision to become a scalable reality, insurance carriers will need the ability to access these alternative data sources in a consistent, cost-effective manner, with the data structured in a way that can be easily integrated into their systems. Rules engines will also need to be enhanced to make use of this data and able to make automated decisions to determine the appropriate next steps without labor intensive efforts from highly skilled underwriters.

Distribution must adopt digital processes and pivot its value proposition
For any of this to work, distribution needs to adopt digital processes. One of the biggest challenges to scaling accelerated underwriting has been agent adoption of these programs. Pushback has come from agents not wanting to pick one carrier and give up “shopping” or “spreadsheeting.” In addition, many agents and BGAs don’t want to give-up “building the file” themselves. Distribution needs pivot its value proposition away from shopping and navigating a convoluted and complicated process and toward bringing their clients the best holistic solution that combines the right product with the right process.


It is said that “necessity is the mother of invention,” and this is proving to be true in the life insurance industry’s response to COVID-19. The pandemic has accelerated the inevitable advancements that our industry has been slow to adopt. These advancements benefit both the industry and the consumers it serves. As we emerge from the pandemic, we should not roll back some of the prudent changes we have adopted.

The path forward could be marked by moving away from age and amount charts, and toward underwriting the individual and determining what additional information is needed based on available information. Instead of expanding existing fluidless programs, it may make more sense to blur the lines between AUW and FUW, leveraging less invasive, more consumer-centric methods of obtaining fluids, only if they add significant protective value.

Our ultimate success will allow us to effectively and cost-efficiently access and use these alternative data sources, building rule sets that can analyze and act on the data, and generating agent and BGA adoption of processes.

There is still much work to do, and our industry’s time is now. It’s time to lean in to these innovations and create a more consumer-focused approach to make our products more accessible – especially at a time when more consumers are aware of the value of the protections we offer.


2 responses to “Pandemic Planning: Accelerating the Inevitable”

  1. Chris Kite says:

    In these studies of life insurance needs, distinction should be made between what is needed and what is done by people in retirement vs people prior to retirement.

  2. MB Snodgrass says:

    Great summary of the status in the industry.

    From my perspective, the big question that reinsurers and insurers have not clearly or consistently answered is: what is the goal of the industry?

    Many talk about how their products aim to help people “live longer and healthier lives” while providing greater financial security. But, if those are the goals, the data collected – and the collection methods – must demonstrably support that mission.

    Right now, with the focus on a “data arms race,” enrichment data and proxy data, there is a lot of distracting noise about what data is the most meaningful for both insurers and policyholders. Some companies seem to believe that their primary goal is to manage risk in a portfolio by aggregating as much data as possible. Which is neither an inspiring or customer-centric objective….

    If insurers and reinsurers focus more on the human problems that insurers exist to solve, the answers about how to do AUW and collect biometrics will start to become more clear. Or at the very least, more of the right questions will be asked about what impedes “living longer and healthier lives,” so that more of the optimal pilots and experiments can be designed.