The Un-Insurable Gap
by Carolyn Ellis
Ms. Ellis is Features Editor for Advisor Magazine. Connect with her by e-mail: cellis@lifehealth.com.With more than 30 years of experience, Prudential’s chief underwriting officer takes the long view of medical underwriting. Prudential recently announced an initiative with AEQUALIS to offer life insurance to people living with HIV. We talked with Mike McFarland about Prudential’s new partnership, trends in underwriting previously uninsurable conditions, and efforts to make underwriting more consumer-friendly and more appealing to Millennials.
L&HA: Prudential has partnered with AEQUALIS to make life insurance available to individuals who are living with HIV, who meet underwriting qualifications. Tell us about this special project.
MM: AEQUALIS came to us about 18 months ago with a plan for addressing an unserved segment of our population. AEQUALIS founders Andrew Terrell and Bill Grant both have had family members impacted by being HIV positive. They’ve lost friends and watched individuals living with HIV struggle in many areas of financial planning and with things the rest of us take for granted. Driven to change that, Terrell and Grant did background work over several years on mortality statistics to get insurers interested in providing coverage for individuals who live with HIV.
L&HA: How did they choose Prudential?
MM: Ours is effectively a three-way partnership. Prudential is the direct writing company, ÆQUALIS brought us all together, and Munich Re is our reinsurance partner. By coincidence we had been looking at this very thing four to five years ago. At that point we could find quite a bit of clinical data related to individuals who are HIV positive but not a lot of statistical mortality data. That left us without credible mortality data to tell us whether or not we were on the right track and without a credible profile of an insurable individual living with HIV. That’s what ÆQUALIS and Munich together brought to us.
L&HA: You must be very pleased to be going public with this initiative.
MM: Lots of people are calling to thank us for being the first to take this step. My greatest wish is that this opens the door for other companies to follow. It’s important for the industry to recognize that while everybody living with HIV isn›t insurable, some people are. It’s the same with coronary disease. If we start to view HIV as something that can be successfully treated and managed, everybody will benefit. For Prudential, it›s not just about opening new markets, which is important to us as a business, but also to opening to diverse markets.
L&HA: Is underwriting increasingly more open to other chronic diseases?
MM: We already insure a wide variety of chronic diseases, some that 15 or 20 years ago there was limited availability. Within our underwriting at Prudential, we have a consistent, continuous process where we monitor the research that comes out of medical science and clinical medicine. As we see improvement in longevity and mortality results, we make improvements to our underwriting.
If you go back 30 years to when HIV first emerged as a medical issue, the medical community knew little or nothing about how to manage or control this virus. HIV is devastating because it destroys the immune system, and there were no treatments to help people survive. In that environment the insurance industry took the approach to decline insurance coverage to those who were HIV positive.
That approach persisted all these years, and because it persisted, nobody was looking at mortality. That left underwriters with nothing to work with over time. And then when we began to get that data in very credible fashion from Munich with assistance from ÆQUALIS, that›s when we made that decision that this is the right thing to do and now is the time.
L&HA: It’s great as we enter the New Year to have something so bright on the horizon. Are there other medical conditions besides HIV that Prudential is addressing?
MM: We watched the improving treatments related to Hepatitis C, and we now insure more of those individuals. We’re always working on ways large and small to improve the underwriting approach to a specific disease and to make the underwriting process easier for consumers. In 2015 we started ordering fewer resting electrocardiograms and we substituted a blood test which could be added to the same blood draw. Consumers like not being wired up for the electrocardiogram. That change was a major improvement in the purchasing process with Prudential.
L&HA: Partnering with an innovative organization like AEQUALIS has to be exciting, but how does this fit with underwriting improvements in general?
MM: Underwriting is in a state of change. The risk selection model that we use is fundamentally the same model in use when I trained as an underwriter 35 years ago. Certain pieces have been modified and have become more sophisticated, but the fundamental model hasn’t changed that much. The upside is that outcomes using this model of risk selection are very predictable. However, the younger generation of consumers is not particularly enamored with being asked intrusive questions about their health or financial status. They’re not enthralled with the idea that we stick a needle in them and draw blood. They want a process that’s less intrusive and faster. We want efficiencies, too, so there’s a lot of exploration across the industry using big data, data analytics, and alternative ways of engaging in risk selection.
L&HA: How do agents and advisors with prospects or clients living with HIV work with ÆQUALIS?
MM: ÆQUALIS has informative websites and customer service folks who help agents understand the sensitivities of dealing with individuals living with HIV, helping them understand that many people living with HIV aren’t familiar with the terminology of life insurance or the underwriting process because it’s never been open to them. Agents can work with ÆQUALIS to get their clients qualified and then bring them to us. Because of the regulatory issues from any number of states that are wrapped around HIV agents still have to demonstrate that the process they are following is a compliant process. We are in almost all 50 states.
L&HA: We›re saying that data and the technology to collect, manage and analyze are sharpening underwriting and broadening access to insurance.
MM: When what you›re working with is research, the more credible data that you can collect and the more credible data you have to support your research, then the more credible the outcomes of that research are to your decisions to insure or not insure any individual. Over time, as you continue to do research and aggregate the data, you now find you have a body of information that informs any number of decisions you want to make, not just about a particular disease process, but it can lead in other directions where you might find improvements.
L&HA: As we look ahead to this New Year, what do you see?
MM: I think we’ll see the industry continue to look at data analytics to support any number of initiatives in underwriting and other areas. We’ll see a keen focus on the younger generation of consumers and what they want and how it is to be delivered. We›ve already started this process; we just need to follow through. As for those living with HIV, it’s my hope that other carriers will join us in this effort. The more we learn about mortality related to this disease the better we can be at insuring more people. ◊
