Health information exchanges: The future is now for life insurers

At its core, life insurance underwriting hasn’t changed much. It still involves a complex process to assess an individual’s health and longevity risks. What has changed, and what continues to evolve, are the tools, techniques, and information available to perform such assessments.

An application for a traditional life insurance policy still requires detailed information about any past medical conditions, including any procedures performed, the doctors and hospitals involved, the medications prescribed and taken, etc. However, these applications are often partially or incorrectly completed and submitted because they still rely, at least in part, on the applicant’s memory and forthrightness. It’s not unusual for applicants to have difficulty recalling the specifics of procedures or ailments they may have had five to 10 years ago. And of course, certain coverage/risk amounts (generally more than $2M) may also require life insurers to get an applicant’s full medical record from any or all of their physicians. These documents are usually provided as a written statement from a physician that then has to be read and interpreted by life insurance underwriters.

In short, it’s still a process that is open to misinterpretations, assumptions, errors and omissions, and at the same time, it lengthens the time it takes to underwrite an insurance policy.

However, advances in the healthcare industry and the formation of the Health Information Exchange (HIE) provide the means to improve the life underwriting process significantly. One of the key advancements in the health industry is the usage of the Electronic Medical Record (EMR). Physicians uniformly use diagnosis and procedure codes to record the condition or ailment, and the procedures performed to address medical ailments and procedures. These codes are also used to create claims for health insurers for payments to physicians. The EMR and claims are then submitted to the HIEs. An HIE typically contains EMRs for patients that are not just from a single patient-physician relationship, but rather from a patient to many other relationships other physicians, hospitals, medical practices and the like. Most HIEs will also have the pharmaceutical records detailing the history of the medications taken by the patient.

Since most any of the exchanges contains vast amounts of data, an AI-approach could be used to mine the required data to determine the existence of any key diseases, illnesses or other issues for underwriting. Life insurers could more reasonably rely on the diagnosis and procedure codes contained in the HIE to determine a more specific medical history for any applicant. Done well, this has the potential to greatly improve the speed and accuracy of the life insurance underwriting process.

Many of the current HIEs are funded by physicians and providers and as such are always struggling to survive on a limited budget. If life insurers started to use this data, it would provide another revenue option for the survival of HIEs making it a win-win solution.

The best way to start using the data in these HIEs would be to leverage evidence vendors who are used by life insurers to provide medical histories using traditional paper-based and in-person methods. One of the services these evidence vendors provide is calling the insureds to ascertain a detailed medical history along with urine and blood tests. Of course, this service is highly dependent on the insureds availability. A better alternative could be first to check the HIE data to see if there is information available for that insured and use it accordingly. This could speed up the process of underwriting considerably.

And for life insurers, such a process could be essential for appealing to a new demographic of life insurance customers. It is clear that the most recent generations—Gen X, Y and Millennial—are less interested in insurance than their parents and grandparents, and part of the reason for that is the onerous process new life insurance applicants must submit to. These generations will not abide by the “old” rules of life insurance underwriting that often includes in-person interviews and in-home medical exams. That is anathema to the sensibilities of these new generations, and they will, apparently, forego life insurance rather than comply with these outdated (in their view) rules.

Instead, these new generations are much more comfortable with non-personal touch for acquiring services of any kind. For life insurers, that means creating services using AI, telematics, automated call and support services, and more robust customer portals and mobile applications.

The wider adoption and use of HIEs is a step in that direction. However for that to occur, life insurers, providers and physicians need to collaborate more effectively, including building a consensus of vision for what and how the HIE ecosystem should evolve. For the life insurance industry, the future really is now.

By Yunus Burhani, X by 2

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