Insurers have been building out digital capabilities for insurance advisors in recent years.skynesher/iStockPhoto / Getty Images
BMO Insurance is launching an underwriting tool with artificial intelligence capabilities that will be able to issue instant underwriting decisions on life insurance applications up to $5-million.
The company said the tool, called SmartDecision, will cut out administrative follow-up work and reduce cycle time for advisors, giving them and their clients a clearer view into the underwriting process and decisions.
Often, that process wasn’t transparent for individual life advisors, says Katarina Nikolic, BMO Insurance’s vice-president and chief corporate underwriter.
“We wanted to take the underwriting experience that happens at the end and embed it right into the client journey.”
She says advisors typically don’t understand the underwriting process and that the greater clarity provided with the new tool is meant to help them feel more confident when they’re completing applications with clients.
“Once they’re confident, they’re more likely to get familiar with and get more use from the tool itself.”
The insurance industry has been adapting since the COVID-19 pandemic, when underwriters discovered they could assess many applications without medical exams and fluid testing.
Earlier this year, Manulife Financial introduced a new electronic life insurance application with fewer questions and a more personalized approach.
BMO Insurance has been building out its digital capabilities for insurance advisors in recent years. Last year, it introduced Rovr AI, an AI-powered digital assistant for advisors and managing general agents that helps anticipate application outcomes for clients with a medical history, including whether they’ll be insurable or if their application could be rated.
Rohit Thomas, president and chief executive officer of BMO Insurance, says it’s all part of an effort to ensure advisors can spend more time “on the advice part, serving more Canadians, by removing a lot of that friction.”
Ms. Nikolic says the insurer is comfortable issuing instant decisions on policies of up to $5-million based on its favourable actual-to-expected mortality ratios and its mortality slippage, a comparison between the outcomes of accelerated insurance decisions versus those that would have been made with full underwriting.
“That gives BMO Insurance good comfort that we’re putting the right risks on the books, but also that we’re offering the most expansive solutions to the average Canadian.”
SmartDecision embeds data analytics, predictive modelling and BMO Insurance’s underwriting rules engine into the electronic application for term life, universal life and whole life insurance.
“There are various models to assess and triage cases; those form part of a personalized risk journey based on client disclosures,” Ms. Nikolic says.
The predictive modelling is based on BMO Insurance’s internal data on policyholders’ medical history, lifestyle, occupation and financial history.
When advisors and their clients are filling out the insurability questions in a life insurance application, SmartDecision prompts additional personalized questions based on the client’s original answer.
The questions have been redesigned in plain language and are presented directly to clients. That helps ensure they understand the medical and lifestyle information being requested and feel confident providing accurate responses, Ms. Nikolic says.
If someone reports high blood pressure, for example, the tool would ask which medication they’re taking, whether they take blood pressure readings regularly and when their last one was. It also asks about “comorbidity factors,” or associated health concerns – for example, asking that same hypothetical client whether they have a family history of cardiac disease or whether they smoke.
“That personalization of how we’ve tailored those medical questions is a really key part of the process,” she says. “It really is specific and bespoke to what they answer in their own individual medical histories.”
Ms. Nikolic says the entire electronic application takes, on average, 20 minutes and SmartDecision can make a decision in 14 seconds. The industry average for underwriting decisions is upward of 28 business days from submission, she says.
SmartDecision can handle all standard cases, regardless of clients’ medical history. Eligible applicants won’t need to undergo tele-interviews or meet medical evidence requirements. But Ms. Nikolic says applications that are rated or declined are sent to human underwriters.