Streamlining Data for Insurance Carriers

In today’s data-driven business world, organizations rely heavily on data to make informed decisions. For insurance carriers, one of the most crucial aspects of underwriting an applicant is obtaining relevant data, particularly household, financial, and medical information. While medical data can only be sourced after a policy application is made, the rest can be obtained from various public sources and data brokers.

However, a common observation is that most carriers only purchase this data after receiving a customer’s policy application. While this approach may seem logistically convenient, allowing all necessary data to be gathered at once, it presents challenges. Delaying the data acquisition process means carriers cannot ensure that the applicant has been placed in the correct product class. Consequently, numerous coverage rejections and frustrated applicants arise.

To address this issue, carriers should consider procuring as much data as possible on a prospect from the initial engagement. While this data collection won’t include medical information, it will encompass most household and financial data that a field underwriter would typically gather. By gaining access to this data earlier in the process, carriers can promptly assign applicants to appropriate product classes and make provisional coverage decisions. This approach is known as digital field underwriting.

Carriers have two options for implementing such a system. Firstly, they can establish an in-house data collection and storage system to handle the substantial amount of data required. This choice offers direct control and oversight over the entire data infrastructure. However, given the ever-growing data needs, it can become overwhelming for an in-house team to manage effectively.The second option is to partner with a third-party intermediary that already possesses an extensive data storage system. While this incurs a cost, it provides carriers with greater flexibility to expand their data requirements. Ultimately, the choice between these options depends on a carrier’s experience in managing large volumes of data.

As we envision the future of the life insurance industry, it is important to reflect on its past evolution. While the disappearance of door-to-door sales agents was expected, it is essential to reconsider and revamp outdated practices for the modern era. Field underwriting is a prime example of an industry practice that should make a comeback in a new format.