Recently there has been a lot written and said about Algorithmic Underwriting Programs (AUPs), also known as Accelerated Underwriting or Fluid-less Underwriting, by AgencyONE and many of our colleagues in the life brokerage business. In a COVID-19 world of “social distancing” advisors and clients are finding that this may be “the only way” to submit insurance applications in hopes of a no-exam, no-fluids\labs (blood and urine) underwriting process and the fastest way to get a policy issued and in force.
AUPs, currently offered by many carriers, allow clients to apply for BOTH term and permanent life insurance via an electronic application submission or “drop-ticket” subject to certain guidelines, for example, up to $2,000,000 of coverage and up to age 60. AgencyONE has created a spreadsheet which is available on our website
and available to all AgencyONE 100 advisors that details the carriers and guidelines, etc. Please note that this spreadsheet is fluid and changing almost daily as carriers continue to modify their fluid-less underwriting guidelines under the current pandemic situation.
So, what is “The Problem”? The problem is that many of these AUPs are woefully lacking in what the carriers call “throughput” – which are applications submitted that are successfully accelerated without exams. Clients are being rejected from these programs after the application has been submitted and this presents an issue for BOTH the client, the advisor and for AgencyONE. But not everyone is rejected, and this is where “the truth” is important.
“The Truth” are the numbers behind the success, or not, of the Accelerated Underwriting Platforms and the numbers vary widely between carriers. One carrier is experiencing a 46.5% acceleration of the applications submitted. This means that less than half of all applications submitted under their AUP get accelerated successfully. But that DOES NOT tell the entire story, because AUPs are highly sensitive to age. For the “right” age demographic, the statistics are better. For ages 18 to 34, that number goes up to 61.7% and for ages 35 to 49 the number is 50.7%. So, with this carrier there is better than a 50% chance of acceleration.
Another carrier is doing a little better – with 38,000 AUP submissions about 65% are being accelerated without labs or exams. But the average age of the insured is 38. And a third carrier, with 72,000 cases submitted under their AUP, is experiencing a throughput of 46% of clients between the ages of 18 to 40 and 35% between the ages of 41 to 60. And in the spirit of full disclosure, there is a fourth carrier whose overall average throughput is only 20% (not very encouraging).
We could continue with “the numbers”, but we hope you get the point. There is value in these AUPs, but we need to stack the deck in our/your favor to increase your throughput. And this brings us to “the solution”!
“The Solution” is using the tools and questionnaires available to do comprehensive field underwriting prior to carrier selection and case submission to do everything possible to ensure that your case experiences AUP throughput. Statistics confirm that with good field underwriting, throughput does significantly increase! One carrier reports that their approval rate increased from 41% (no pre-screening/checklist) to 60% with the advisor using the checklist (average age – 39) and there are other carriers whose statistics also confirm this conclusion.
Last week AgencyONE had a webinar on our VIVE submission platform. This platform has a Health Analyzer questionnaire that will tell you if your client will likely qualify for AUP. It can be quickly completed by asking the client a few additional questions – consider this “field underwriting” (yes, back to the basics of Insurance 101).
Other platforms which we have highlighted, such as iGO, also have similar screening questionnaires. In addition, many of the carriers that offer AUPs have checklists that can be completed to provide guidance on whether the prospective insured is a good candidate for accelerated underwriting.
If you (the advisor) use the screening checklist, the chances of success are far greater than if you don’t. And the advisors that discuss the details of their case IN ADVANCE with the AgencyONE Underwriting Team and seek advice on carrier selection are also experiencing a greater percentage of throughput success. Additionally, full disclosure with the client is critical. It is imperative that you discuss with your client, UPFRONT, that even with fabulous field underwriting there is a possibility that the case MAY NOT qualify for AUP (some people will walk through the TSA checkpoint at the airport and will get pulled out of line for a random “pat down” for no obvious reason).
We are in an evolving environment and one that is changing very quickly. Accelerated Underwriting Programs should be reviewed, considered and utilized for BOTH your term and permanent cases, but in the proper situation. Do not give up on accelerated drop ticket underwriting just because you had a client or two that required exams, as this is the future, not because of COVID-19 but because this is where the client experience is going to end up. The better field underwriting we can give the carriers, the more successful these programs will become. The more successful they become the more expanded the limits will be, until fluid-less underwriting becomes the norm for the life insurance industry.