Gen Re's Andres Webersinke calls time on over-generous disability income insurance products

Andres Webersinke is Head of Life/Health Region Australia/New Zealand for General Reinsurance Life Australia Limited. Andres identifies the issues facing disability income insurance, which are many. Briefly, they are: 

  • Over-insurance - on an individual case basis. Usually the replacement ratio is too high, caused by a failure to offset some income during the claim.
  • Benefits paid without tax deducted - and claimants may not pay tax for a variety of reasons
  • Employers failing to support a person through either work changes or rehabilitation opportunities
  • Rating / research houses encouraging broader or more generous policy definitions
  • Reinsurance and cross-subsidisation
  • Product design
  • Underwriting
  • Pricing
  • Claims philosophy

Andres also makes suggestions to tackle some of these issues. With a little creativity there are more opportunities beyond these too. Drilling down into individual segments that have particularly poor outcomes would yield more opportunities to tackle some of the knottiest issues. Examining product combinations - particularly those with mortgage protection, but not only them - could also help a lot. Two concepts of the insurtech world could also unlock solutions for a large part of the market parametric cover and claims automation. You can obtain your copy of the report by contacting Gen Re.

Time for change by Andres Webersinke v2



Gen Re: machine learning and underwriting

Gen Re has an excellent article on the role of classification model performance in underwriting. This includes some useful comments on machine learning, plus the gloriously-named 'confusion matrix' with associated metrics for assessing the accuracy of models. There are some broad implications for the future of underwriting which can be drawn, you should check out the whole article, of course, but the thoughts below are my own, based on their article and other sources:

Larger data sets, and especially digital test data sets of sufficient size, are particularly valuable for assessing a model. Companies would do well to both maintain such data sets (over time, with claims performance data attached) and the expertise necessary to assess the value of different classification models. A presumption of the efficiency of current underwriting methodologies is not necessarily well-founded. It is also somewhat self-selecting and may lead to ignoring data not currently collected, which could be of value in developing new methods for making underwriting assessments. Non-traditional data sources - such as credit records, social media profiles, wearable health tech, and so on, could provide new opportunities for assessment models. You won't know until you look, so some investment in collecting better data is necessary R&D expenditure.

Data collected is not always equal to data assessed, also, data required to apply for a product may be reduced, while data-collection may continue after application (and it may be useful and economically rewarding to continue to collect the data) so that better analysis of factors for future modelling may be identified. A practical version of that point might be: we can still have a non-underwritten product (to make application easy) and collect lots of data to feed our machine learning tools to enable better underwriting decisions to be made on the basis of third-party data, for future sales.


Aspire Conference by Gen Re

Gen Re hosted an excellent conference on underwriting and actuarial matters in Auckland on Wednesday. Topics covered included: insuring diabetic lives, health incentive programmes, progressive trauma pricing, behavioural economics and application forms, insurtech, surveillance and investigations, and pastimes underwriting. Although there was lots of good content, for me the New Zealand lump sum study was perhaps the most interesting. But Insurtech was valuable as well. That may be a reflection of the fact I am less familiar with underwriting and claims, and more familiar with insurtech. I shall write longer pieces on some of the most interesting ideas. 

GenRe Aspire conference

Gen Re staff presenting on the day included, from Gen Re Life Australia: Andres Webersinke, Managing Director, Robert Kerr, Senior Account Manager, James Louw, Chief Actuary, Viviane Murphy, Senior Account Manager, Lindsay Cross, Principal Underwriter, Rob Frank, Principal Claims Advisor, Matthew Ramjan, Chief Underwriter, Winncy Wong, Senior Pricing Actuary, Li Wen Beh, Senior Pricing Actuary, Carol Smit, Head of Claims. From Gen Re Life Cologne, Karin Neelsen, Head of Product Underwriting. 



Critical Illness Standardisation - The Australian Perspective

This article from GenRe discusses the Critical Illness market in Australia and how they are moving toward standardisation:

"One way to simplify complex products is to adopt common definitions across the board. There is a groundswell of opinion in support of requiring the minimum standards industrywide to comply with the definitions, leaving companies free to be more generous should they wish. A Gen Re opinion poll found 69% of senior risk professionals in favour of minimum standardised definitions and even of them becoming mandatory. The Trauma Minimum Standardised Definitions Survey is available on the Gen Re website."

Gen Re feels that a move to standard definitions is not just window dressing; the serious underlying intention is to reduce the number of Trauma claims that are declined. There have been some high profile cases - take the ABC Four Corners investigation last year. But in recent years trauma has not generally been a significant number of claims. 

Click here to view full article.

Predictive Analytics Global Survey Results

Gen Re conducted a study from 136 life and health insurers in 23 countries to find out how big "big data" is in the industry. 

"Regardless of obstacles to overcome, it is apparent that insurance companies are seriously looking at the usefulness of predictive analytics. If plans stay on track, over the next two years the industry is set to experience considerable growth in this area and undergo significant changes. We’re continuing to monitor trends - and are focused on solutions that will help further the successful use of analytics and applications for insurance."

Click here to read the article and view some of the results.

Exercise, Mortality, and Underwriting

I am both a data nerd and like to keep fit. So a fitness tracker - in my case a Fitbit - was kind of inevitable. I have worn one for about two years, and love it. But apparently the typical duration of use is just three months. Some people tire of them - just like they tire of going to the gym. Some people like the data for a while, and return to using the devices again later. Here is an interesting article from Ross Campbell, from Gen Re's Life/Health Chief Underwriter, Research & Development about how the number of steps taken each day may affect mortality. One day it would be nice if we could use all the health data that already exists - held by our government, and on services such as fitbit - so that we could automate the process of full underwriting.