Once upon a time, buying a life insurance policy involved a lengthy and complicated underwriting process.
At worst, it could take as long as two months or more before a policy could be written. However, new technology has enabled developments such as AI-based accelerated underwriting, electronic medical records, and telemedicine, all of which are transformative. The COVID 19 pandemic is accelerating the adoption of these innovations.
With accelerated underwriting, it’s both faster and easier to get life insurance by meeting three criteria: good health, good credit, and a clean driving record. Qualified applicants can get fully underwritten, normally priced term life policies with a death benefit up to $1 million without being required to submit to a medical exam, although the benefit may vary based on the applicant’s age. The process involves no visit from an insurance company medic, nor does it require a physician statement of good health or copies of medical records. With these steps eliminated, the process moves much more quickly.
Now that the COVID-19 quarantine precludes personal interaction and unnecessary doctor visits, insurers are dispensing with medical exams and relying much more heavily on the types of data used in accelerated underwriting. Relevant information can be obtained from motor vehicle and driving records, credit bureaus, prescription databases, and electronic health records. Recent blood work can often be obtained through past medical exams on the basis of medical billing claims data, which becomes available to insurance companies when patients sign the standard HIPAA release form.
The factors that qualify an applicant under accelerated underwriting include, first and foremost, age range. The COVID crisis may influence age range eligibility, but other factors apply just as in accelerated underwriting. Applicants should be free of disqualifying medical conditions like cancer, diabetes or high blood pressure, and have a family health history with no biological parent of sibling dying from heart disease or cancer before the age of 60.
Factors not related to health also matter. A bankruptcy within the past 5-10 years is a black mark, as are citations for reckless driving or drunk driving within the past five years. Also, more than two moving violations within three years can be a disqualifier, as can a felony charge. Finally, research has shown that people with good credit scores live longer, so a negative credit history could also torpedo accelerated underwriting.
The growing availability of electronic health records (EHR) couldn’t be more fortuitous, as insurers will be heavily dependent on these records during the quarantine period. Indeed, the availability of these records was having a transformative impact on the process of buying life insurance even before COVID was an issue.
Essentially, an electronic health record is a digital version of a client’s medical history. Most healthcare providers now offer patient portals through which individuals interact with their physicians and other healthcare providers. A complete longitudinal medical history with the provider exists within the portal system, and EHR can aggregate health data. When this information is made available as part of the insurance application, it negates the need for a paramedical exam and can dramatically increase the time-to-issue for a policy. In the context of the pandemic, electronic health records make it possible to continue the application process without interruption.
The COVID pandemic is also facilitating another change that will have a dramatic impact on both healthcare providers and patients alike and could have ramifications for the insurance application process as well. With hospitals taking only COVID cases and emergencies, elective procedures postponed, and ordinary doctor visits out of the question due to the quarantine, many doctors and patients are turning to telemedicine to deal with health problems.
Telemedicine involves the use of technology like laptops, smartphones and tablets to connect patients with healthcare professionals. While it obviously won’t be appropriate in cases where a physical examination is necessary, there are many instances in which it can save a visit. For example, patients who simply need to get a prescription refilled, follow-up after a procedure or test, or consult about a simple and straightforward problem are perfect candidates for an online consultation.
There are many reasons why this is so beneficial. Elderly patients who are frail or infirm, for example, can avoid a tiring trip to the doctor’s office and limit exposure to communicable diseases; even with COVID out of the picture, a simple cold or flu can be dangerous. Patients who live far away can be saved an unpleasant commute, and parents with small children at home will have one less reason to deal with childcare issues. It’s an enormous time saver for everyone involved – the patient isn’t trapped in a waiting room for an hour, and the provider may be able to fit more visits into a single day. Now, insurance coverage for telemedicine is more widespread and some insurance companies offer their own telemedicine options for minor problems.
COVID 19 is likely to have long term implications for both the healthcare industry and the insurance industry. The pandemic will accelerate the use of telemedicine, accelerated underwriting practices and electronic health records, and permanently alter the insurance underwriting process.