The Life Insurance underwriting and risk assessment landscape is experiencing rapid change driven by new data sources, innovative tools, and a race to automation. At the same time, medical advances in early detection, diagnosis, and treatment are paving the way for people to live longer and healthier lives. Yet many other health trends are headed in the opposite direction, such as the rising prevalence of obesity and diabetes. This is all happening at a time when many of the most experienced life underwriters are coming to the end of their careers, and very few people are choosing to enter the profession. Combined, these external forces create a challenging environment for underwriting executives throughout the industry.
In my role as Chief Risk Assessment Officer at Munich Re Life US, I have the privilege of working alongside the best in the industry – both my own team, as well as leaders at our client companies. What better way to explore these challenging questions than to ask the experts directly? In this series, I document their ideas and insights related to these issues.
To kick things off, it’s only fair that I sit in the hot seat and answer some of these questions myself. So, here we go.
Can you provide an overview of your career path?
After studying math as an undergraduate and graduate student, I began my career as an actuary at a P&C company. I quickly found that I was more interested in life and annuity insurance. I also gained a strong respect for underwriting and took every opportunity I could to be involved in projects where actuaries and underwriters collaborated. Over time, my team expanded beyond actuaries to include underwriters, medical doctors, and other professionals. Along the way, I worked at insurers and reinsurers, both domestic and international. To give you a better sense of the mix, I mapped it out in this chart:
Tell me about a time or opportunity that had a major impact on your career trajectory.
Whether it was during the difficult days of the 2008 financial crisis when I was working on the trading floor of a major US insurer’s investment company; a move abroad and working in another language in a vastly different market; or being the head of biometric research at the height of the global pandemic, I have found that embracing change and leaning into challenging experiences invites personal growth. Career advancement and personal fulfillment often came after I volunteered to take on a difficult assignment or accept a challenge beyond my comfort zone. I learned that you should never let doubt or fear be a stumbling block to growth.
What market trends excite you about where things might be headed?
Here are a few of the most exciting trends that our team tracks and publishes thought leadership on:
What are some of the major challenges the industry faces or will face in the near term?
One challenge facing the industry today is balancing the important individual privacy rights of insurance customers, the need for insurance companies to have access to relevant health information to make appropriate risk assessments, and the limitations and potential biases of models built to assist the underwriting process. It’s our duty to work together with regulators to arrive at a balanced approach on these issues.
Are there any blind spots that worry you in underwriting today or in the life insurance market generally?
My first thought is the blind spots that can exist in rules, algorithms, and models being built for underwriting. There is always the potential for models to have blind spots. This could be the result of training models on limited historical data, or because the datasets we are using are missing an important feature or variable, or under-representing a subpopulation. Blind spots can also arise because of trends that are not fully developed in the underlying data and not adjusted for in the output.
If so, what can we do to fix those blind spots?
You have to expect blind spots and have a risk culture that creates a safety net to identify and react to blind spots quickly.
As an actuary, I immediately think of an actuarial control cycle, where you set up regular testing and monitoring, and the results of the testing and monitoring lead to adjustments in the underlying model. This is much like a random holdout program or a post-issue audit program that monitors the emerging results of an underwriting program and provides insights that lead to the refinement of that program.
Do you have a long-held position that you have reconsidered in recent years?
Given my training as an actuary, I’ve always tended to view problems and solutions through the lens of actuarial science. But my time working with underwriters has helped me appreciate the fact that I was limiting my view and the possible solution set because of the one-dimensionality of that view. I now think of actuarial science and underwriting as two different lenses you can use to look at any given problem. These two lenses are not simply additive; they actually work in tandem to create a multi-dimensional viewpoint and open up many new possible solutions.
What does “get the basics right” mean to you, and why would that be important in underwriting and risk assessment?
The underwriting landscape is undergoing rapid innovation. We can get caught up in the excitement of automation and artificial intelligence. But at its core, life insurance underwriting is the process of condensing a lifetime of medical and financial information into a single risk decision about the future. Hence, getting the basics right starts with gathering sufficient information to make a correct risk assessment. This requires cross-functional collaboration between medical directors, underwriters, actuaries, and data scientists to tease out the incremental benefits of new data sources. It also requires strong judgment to know what additional information to obtain and to know when you have sufficient information to make an appropriate risk decision while minimizing acquisition costs.
The next article in this series will explore the underwriting trends and challenges with Dave Goehrke, Head of Underwriting Risk Management and Pricing Support.
