With their generous free cover limits and largely rules-based methodology, group risk providers have significantly lagged their group private medical insurance (PMI) counterparts in usage of technology during the underwriting process.
Although group PMI is making increasing use of a medical history disregarded approach for larger schemes, individual medical underwriting still plays a central role. So, the ability of technology to help with this has not gone unnoticed.
Susie Colley, managing director of specialist intermediary Westcountry Health Care, says: “Technology has particularly helped PMI underwriting since the pandemic. All applications are now done online and via email, and many medical examinations are done by video chats. However, some PMI providers are still more high tech than others.”
Determining which PMI providers are ahead of the game, particularly regarding usage of AI, was not helped by Vitality, Aviva, Bupa and WPA not accepting Corporate Adviser’s invitation to comment — suggesting that AI usage could be an especially sensitive topic.
Axa Health reports that it is not currently deploying AI in underwriting or to price premiums but some global PMI providers are clearly already doing so, and its use appears destined to accelerate.
Nicolas Michellod, digital proposition leader at financial technology research and advisory firm Celent, says: “Predictive AI has been used by medical insurers in their underwriting for a couple of years and is a useful tool in the box but there is still a lot of manual interpretation of the data needed.
“The need for manual interpretation will decrease in the future with the use of generative AI, which will be able to suggest decisions, based on input, and industrialise them. I expect generative AI to be a major influence on medical insurance underwriting within five to 10 years, although good underwriters will still be needed.”
Group risk and AI
The technological gap between the PMI and group risk sector may be closing. While there is no evidence that AI is currently being used by the major group risk underwriters, possible future developments are volunteered with just as much enthusiasm as on the PMI side.
Craig Garland, head of scheme underwriting at Canada Life, says “AI is not currently playing any part in our underwriting processes, and I imagine that would almost certainly be the case with our competitors. I do see it changing in the future but it’s probably a couple of years away.
“We are at the stage when we would see relative use cases within our processes and are currently exploring where AI could present an opportunity. I am not talking about replacing skill in underwriting but about augmenting it and making existing administration-led processes more efficient. Could it, for example, summarise information from a submission for an underwriter?”
Aviva actually hails the emergence of AI technologies as a potential turning point for the group risk industry. Highlighting that data has always been at the forefront of underwriting, it predicts that AI will offer insurers the ability to solve problems and predict future trends, enhance data analysis, improve risk assessment accuracy, and streamline the underwriting process.
Jason Ellis, head of group protection distribution at Aviva, says: “Ultimately, this will improve customer experience by enabling insurers to offer solutions tailored to their individual risk profile and underwriting
needs. It’s an exciting time for the industry as we explore these technological frontiers.
“But we will take a measured approach to ensure that we harness these innovations responsibly, that customers and our data are protected and that we stay focused on delivering value.”
Zurich observes that if the current rules-based SME portals, which typically only cater for up to 250 employees, started extending to around 1,000 employees and involving an element of scheme underwriter judgement then AI might be capable of supporting it.
Nick Homer, head of group risk market management at Zurich, adds: “It’s just a question of whether it would be a compelling business case. Group risk is a very traditional market in the way it operates, and it doesn’t have the volume of the retail protection market.”
The power of the portal
For the time being, the gradual evolution over the last two decades of SME portals, which all the major players now provide, remains the one group risk technological underwriting triumph.
Originally just offering quotation facilities, most now go far beyond this. For example, Canada Life’s CLASS system generally enables advisers to both obtain quotes and actually place cover on risk within five minutes, and extends to annual renewals, periodic rate reviews and e-reporting.
For larger schemes, most technological advance has resulted not from insurers’ own systems but from more sophisticated employee benefits platforms and HR and payroll technology, which are providing underwriters with better data around employee absence and sickness, alongside their usage of other health-related schemes, be PMI policies or cash plans. But there are hints that change could be on the cards.
Craig Garland says “It could help if, for example, quotation submissions were provided in a more uniform way. We currently have software that helps us to an extent, but we continue to explore new technology. We have existing relationships with insurtechs and continue to monitor what’s out there. It’s a strategic priority.”
The YuLife dimension
Outside the major group risk players, YuLife has been seen as a technology innovator in this sector, and using data and behavioural science to improve risk assessment, encourage healthier lifestyles and personalise its insurance offerings.
Since being founded in 2016, it already has over £100 million of in-force premium and boasts a 44 per cent monthly active user rate—11 times higher than typical health apps.
Amongst its most interesting recent developments have been a partnership with the University of Essex (see box) and a piece of work with several partners, that extends beyond just group risk, aiming at mitigating the negative impact that hallucinations have on AI large language models.
Josh Hart, co-founder and chief technology officer at YuLife, says: “Once we have stopped hallucinations, generative AI could become a formidable underwriting tool for group risk. We can expect progress on this side within a year, and I think the entire group risk market’s underwriting will be able to benefit.”
No-one is predicting that group risk schemes will soon start appearing on the latest aggregator sites, but there are signs that the sector is modernising its underwriting, and starting to
shake off the more conservative image that it has had for a number of years.
BOX:
Since June 2023 YuLife has been partnering with the University of Essex in a 26-month programme to evaluate the effects of its game-based app on public health and individual wellbeing. The study, which is funded by Innovate UK, will culminate with the publication of an academic paper in late 2025.
Josh Hart says: “We want academic validation of a randomised controlled trial in order to gain credibility with the actuarial departments of insurers and reinsurers that we are improving health outcomes and reducing risk. We are also expecting to demonstrate an improvement in other business metrics like retention, absenteeism and employee productivity.
“We are championing the long-overdue idea that peoples’ degree of risk can change during the term of the policy by building a relationship with individuals and creating lifestyle changes. We have already gone through an ethical committee, got a statistically significant audience and have employers signed up to participate in the study.”
