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The Actuary The magazine of the Institute & Faculty of Actuaries

Tech solution identified to tackle distrust of health and life insurers

New research from Munich Re has uncovered a lack of trust of the protection industry, with a quarter of potential customers reluctant to apply for cover because they believe claims will not be paid out.

Technology could improve health insurance ©Shutterstock
Technology could improve medical underwriting ©Shutterstock

It was also found that 56% feel unable to accurately answer complex medical questions, and that 67% would have greater confidence in the process if their responses were somehow checked.

Despite this, the industry continues to place the disclosure burden on customers, moving away from underwriting based on medical evidence to shortening applications.

It is thought that automated underwriting based on medical evidence via electronic health records could be a solution, with 68% of potential customers saying they would be happy to share their information this way.

“It seems that as an industry we have missed how fundamental our application processes are when seeking to establish trust with our customers,” Munich Re UK & Ireland life & health head of protection, Ian Davies, said.

“In 2018 we will be working with the industry to demonstrate how automated underwriting based on medical evidence on electronic health reports can deliver better customer trust and greater opportunity for the industry.”

The research involved a survey of 500 people, finding that 62% believe the application length for cover is in line with their expectations, and that many would be prepared to share more information.

It concludes that improving the industry’s perceived credibility will need to involve removing the disclosure responsibility from the customer while providing greater claim certainty.

For this to happen, it is thought that barriers to communication between insurers and GPs will need to be resolved in order to increase adoption of electronic health reports.

“The solution we have identified is two-pronged: greater GP engagement allowing easier access to medical records and also automated underwriting based on medical evidence,” Munich Re said.

“Both of these together will lead to proposition changes that will increase policyholder trust and certainty in protection.”

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