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The subscription accelerated pushes the limits of life insurance in the United States


Alain Thériault

18 July 2019 13:30

As they learn the analytical, the american insurers have also become bolder in terms of underwriting fast track : one-quarter of them accept insured above 60 years of age and one in five offers coverage in excess of a million dollars, according to a recent survey that has been undertaken by Munich Re Life US with 28 u.s. insurers.

Formerly confused with the issuance and simplified underwriting accelerated rather consists in a full-risk pricing, but without a medical exam, or samples of bodily fluids, says Munich Re Life US in its report Accelerated Underwriting : The New Paradigm for Risk Selection. Insurers differ according to the extent of the age groups and the importance of the amounts of insurance that are eligible for this new pricing method, adds the reinsurer.

The traditional mode is becoming the exception

Still emerging in Canada, this new mode of pricing is required in the United States to the point where risk selection traditional is quickly becoming the exception, observes the reinsurer. Insurers anxious to improve the customer experience in the face of the growing needs of millénaux are in a hurry to explore new ways to sell and purchase their products, ” says Munich Re.

The reinsurer noted that the limits of the most common eligibility for the subscription is the issuance of 18 to 60 years for an amount of insurance of $ 100,000 to a million dollars. Munich Re refers to these vectors of median range (range median). However, all of the insurers surveyed offer at least the subscription accelerated in the 21 to 39 years, reveals a survey. Few companies limit to $ 500,000 the amount of insurance available under the subscription accelerated.

Non-smoking on the faith

According to the reinsurer, the insurance companies tend to broaden both the age limits and amount of coverage as the number of categories of risks eligible for the subscription accelerated. “While the number of risk categories that is available from a company by way of subscription to fast does not necessarily reflect what they offer in underwriting traditional, the gap is shrinking quickly,” write Lisa Seeman, second vice-president and actuary in the research of biometric and Ron Schaber, second vice-president and underwriter, both of Munich Re.

The survey reveals that two-thirds of the insurers offer that more than 60 % of insurers will offer as many categories of risk of non-smokers in the mode of subscription accelerated than in traditional mode. In addition, two-thirds of the insurers provide the underwriting accelerated to those who have already declared smoking area.

Random checks by which the insurers submit the pricing accelerated to a traditional process allowed them to discover that only 1.5% of the applicants had falsely declared non-smoking.

No impact on premiums

At baseline, 70 % of insurers believed that the largesse of the subscription accelerated would increase the mortality rate. However, the survey reveals that the majority of those who have adopted the subscription track does not have to change the rate of their premiums compared to the one practiced in traditional mode.

As insurers expect to achieve efficiencies in underwriting accelerated, they feel comfortable to maintain premiums at the same level, ” says Munich Re. The simplified process of issuing of contracts, the cost less to acquire a customer, and a higher rate of placement of the fonts are shown in many of these economies, one can read in the report.

Canada is following the trend

Well established in the United States, the underwriting accelerated has made spot oil in Canada, subsequently. From 2017, several canadian insurers accounted for to have been able to borrow this way thanks to the new technologies and predictive analytics (analytics).

Today, it is common to see these insurers to expand their capacity so that new players following in greece’s footsteps.

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