The AUW-expanded face limits we observed in the 2020 survey were initially thought to be temporary solutions for offering less invasive underwriting options to a broader pool of applicants during the height of the pandemic. However, we later saw that not only did these programs not retract back to their pre-COVID limits, but they sparked a wave of secondary face amount increases later in 2020 and into 2021 from other carriers trying to keep up with the market. However, these expansions have not slowed down even into 2024, as this is one of the key areas where we continue to see strong growth in the accelerated underwriting market. This may lead some to wonder how these carriers become comfortable with expanding their AUW programs into higher $2 million+ face amounts bands.

A common way that carriers test the “higher face amount waters” is by offering a banded age and amount eligibility structure, limiting the highest face amounts to younger issue age bands. In the 2024 survey results, we see that one-third of AUW programs offer this banded eligibility structure. Most commonly, the programs offering these banded structures limit the face amount offering for issue ages 50+.

Other programs may get comfortable with expanding into higher face amounts by requiring their highest face amount applicants to be subject to more stringent underwriting criteria, such as the requirement of a digital health data footprint. As a result, expanded eligibility limits can often be accompanied by lower acceleration rates and more human underwriter review. 

Underwriting tools and data source usage continue to be a focus area of Munich Re’s AUW Surveys. Similar to prior years, we asked participants, “What tools and information sources are used, or being evaluated for use, to triage or classify risks in the accelerated pipeline?” The key findings from 2024 include:

• Prescription (Rx) drug data, motor vehicle reports (MVR), and MIB Insurance Activity Index (IAI) – aka the “staple AUW tools” – continue to be used universally on a routine basis.
• E-applications (96%) have gained traction with nearly all companies routinely using them, while fewer companies are leveraging tele-interviews (63%) compared to prior years.
• Non-medical data sources such as identity verification, criminal history, and other public records are in use by the majority of companies (63-81%). 
• Over half of AUW programs continue to use credit data, although we have seen a shift from routine to more occasional usage compared to the 2022 survey results.
• The majority of AUW programs continue to use digital health data (DHD) sources such as electronic health records (EHRs), medical claims (Dx), and aggregated laboratory results (labs), although EHRs and labs, in particular, are more likely to be used occasionally rather than routinely.
• Wearable activity data has yet to gain traction in underwriting, with only 7% of companies evaluating this data source for use in AUW as of 2024 – a drop from 16% evaluating in 2022.

See Figure 2 for more details on tools used by companies to triage or classify accelerated cases.  

Looking back at our initial AUW survey, we’ve seen some notable trends in underwriting data usage over the past six years, as shown in Figure 3, by comparing the percentage of participating companies using and evaluating each tool asked about in both our 2018 and 2024 AUW surveys. This data trend graph can be broken into thirds, from left to right:

1.  Staple AUW tools: MIB, MVR, and Rx have fully saturated the market and have been well used in AUW decisioning for the past decade.
2.  Emerging digital health data (DHD) sources: We have seen the biggest shift (since 2018) in the usage of medical claims data (+77%), followed by EHRs (+59%), and clinical labs (+46%). This steep upward trend can be attributed to various factors, including the increasing availability and quality of data as well as the environment created by the pandemic. With limited access to traditional labs and exams, carriers had to quickly pivot their underwriting processes and integrate DHD to be able to appropriately assess risk and offer coverage. After experiencing internal efficiencies and improved customer experiences with real-time applicant medical data while still maintaining mortality expectations, we’ve seen the adoption of DHD sources for life insurance continue to grow.
3.  Stagnant tools: The industry appears to be losing interest in several tools. This can be inferred from a decline in carriers using tele-apps, fewer programs using/evaluating credit data, and fewer carriers evaluating activity data from wearable devices for use in AUW compared to 2018.   

With the newly added key metric, we observed a clear tradeoff between acceleration and placement rates; carriers with the lowest acceleration rates reported the highest placement rates, and vice versa. Furthermore, we saw a strong correlation between AUW distribution channels, with carriers selling through direct-to-consumer (DTC) on average having the lowest placement rates and the highest acceleration rates. On the other hand, carriers selling AUW through career/captive agents had the highest placement rates and the lowest acceleration rates. 

In the 2024 survey, we continue to differentiate AUW offers and AUW declines/postpones between those that were determined with and without human underwriter review. While we did not specifically ask respondents for their “straight-through processing rate” (STP) due to different carrier definitions, we view STP as automated AUW decisioning without human underwriter involvement. This differs from “light touch underwriting,” which can involve varying degrees of human underwriter involvement on an AUW case. The results confirmed that a large majority of accelerated decisions are still being made with human underwriter involvement. See Table 3 for these details.

Looking Back

One of the most surprising findings of this year’s survey was the trend of acceleration and offer rates compared to 2020, when we first captured these metrics in our survey. While eligibility rates have increased, there has been minimal movement in overall acceleration and offer rates, even after controlling for the mix of survey participants. Some theories behind this plateau include:

1. Eligibility limit expansion: Higher face amount bands are often accompanied by lower acceleration rates, so as we continue to see carriers expand into $2 million max face amounts and beyond, this can bring down the average overall acceleration and offer rates for the program as a whole.
2. Increased availability of data tools: Additional underwriting data sources, especially DHD, will naturally uncover impairments or conditions that may lead to additional AUW kickouts compared to earlier AUW programs using only the staple AUW tools 
3. Mortality slippage management: Limiting AUW offer rates can be an intentional strategy employed by carriers to manage applicant misrepresentation in the fluidless environment, which continues to be an issue for the industry. 

Looking Ahead

To gain insight into carriers’ perspectives on the future of AUW, we asked participants what percentage of their companies’ total life insurance business they predict will be underwritten automatically, with no underwriter touch, by the year 2030. The average response was 49%, representing more than four-fold of the current 11% average acceleration rate with no human underwriter review! 

The supporting thoughts behind these predictions were mixed, with the more conservative automatic underwriting rate predictions emphasizing the significant effort involved in obtaining and implementing new data sources, getting security approvals, redesigning the applications, etc.

Some respondents highlighted that automation was driven by product and demographics and that carriers targeting younger ages and lower face amount demographics will have an easier time achieving high automation rates.   

Lastly, some of the more bullish predictions were accompanied by explanations involving external forces such as the “decreasing supply of underwriters in the job market” and “advancements with EHRs are expected by 2030, which will enable more building of rules within accelerated engines.”