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The days of life insurers asking their customers for detailed and unnecessary information about their health should end, according to Melissa Heyhoe, chief customer officer at MLC Life Insurance.
The insurer has inked a deal with Pacific Life Re that will see it become the first company in Australia to use the global reinsurer's underwriting technology, which MLC Life says will double policy acceptance rates for even people more complex health issues.
"It will enable us to ask the right questions to the right people and not ask for unnecessary information from people. Down the track I could envisage a situation where we might want to ask for blood test and this engine has the capacity to put the request in for the blood test and receive the results back, analyse them and make a determination without any manual intervention," Ms Heyhoe said.
"The end result of this is much better data analytics to understand our customer, understand our industry and think about how we can ultimately be asking the right questions, less questions in a more tailored and personalised way going forward."
This comes as concerns increase about insurers gathering extraneous information about their customer's health, and whether they use this information to knock back claims.
Earlier this year a senate hearing heard about instances where doctors were providing insurers with their patient's entire medical records, because of the general nature of claims forms.
At a subsequent hearing in May, committee members were told there is little clarity about how genetic testing results are being used by insurers when making underwriting policy decisions.
Greater transparency
Ms Heyhoe said Pacific Life Re's underwriting engine (called UnderwriteMe) will mean customer concerns about insurers having too much information could be avoided.
She said this would also mean "more transparency" at claims time – another practice that has come under fire after the recent CommInsure scandal which saw it accused of cherry-picking medical advice to deny and delay claims
"This is an important step of us ... being at the forefront of innovation and making changes that are better across the industry, that actually service all parties in it," Ms Heyhoe said.
"Underwriting has traditionally been a complex and time-consuming process. People typically fill out lengthy, paper-based questionnaires about their health and lifestyle history, and we use that information to determine if we approve life cover and on what terms. In some instances, because of the complexity of some health conditions and other factors, it can take a month to make a decision."
Over 6500 medical conditions are stored on UnderwriteMe, which is about five times that on MLC Life's 10-year old legacy underwriting engine. Currently any conditions that do not appear on the list are transferred to an underwriter for approval, so the updated technology will see a much higher proportion of customers being underwritten electronically and getting instant quotes.
"For example for asthma, which about 10 per cent of the population suffers from, a significant proportion of those customers would go to an underwriter, but with Underwriteme at least 90 per cent of them would have a determination without having to be referred to an underwriter," Ms Heyhoe said.
The industry's Life Insure Code of Practice, which members of the Financial Services Council now must comply with, sets out that where an underwriting decisions has been made solely via an electronic method a customer can have that decision reviewed.
In October 2016, Nippon LIfe Insurance Company, the eighth largest life insurer in the world, acquired 80 per cent of MLC Life from National Australia Bank. It is now investing $400 million into technology.