Underwriters Ascend To E-Manual

Because they were using paper manuals to help assess life insurance risk, underwriters at Great American Life Insurance Company (more than $6 billion in assets, Cincinnati) could only receive information updates as quickly as snail mail could deliver them from the firm's reinsurer General Cologne Re (Stamford, CT). (Editor's Note/Clarification: General Cologne Re's (Stamford,CT) first electronic manual was created in 1997. Its last paper manual was updated in 1998. All manuals were updated electronically in 2000. This year the reinsurer will distribute an Internet-based browsable manual to customers.) Because some underwriters weren't adding the updated pages to their paper manuals in a timely manner—if at all—in some cases risks were not assessed in a consistent manner. Additionally, the paper manual quoting process was just plain slow.

"Producers have 50 to 100 or even 400 companies to choose from," says Kathleen Elzeer, vice president and chief underwriter, Great American Life. "The quicker that Great American Life gets the offer out and the more competitively priced it is, the more likely it is to get business."

Although some carriers produce their own underwriting manuals, Great American Life, like many other carriers, didn't have the many years worth of policy data that is needed to create one. For this reason, the carrier was at the mercy of its reinsurers. Luckily, in addition to General Cologne Re (which provided the paper manual), ING Re (Denver) is one of Great American Life's indemnifiers. ING Re recently developed an interactive electronic life underwriting resource designed to be part of the risk assessment rating process. The reinsurer offers ASCENT as freeware to its insurance company customers.

ASCENT was created by a development team composed of actuaries, underwriters, doctors, epidemiologists and statisticians using evidence-based methodologies to generate ratings for medical conditions. The tool brings together expertise in medical and financial underwriting, international risk assessment, mortality and medical research, avocational evaluation and the older age market. Questions associated with risk can also be sent electronically through the interactive tool to ING Re.

Great American Life began its use of ASCENT in March of this year. According to Elzeer, the installation of the ASCENT CD ROM took only a couple of hours. Training was provided by ING Re to ASCENT's soon-to-be end-users, who were educated on the functionality of the tool's pricing mechanism. For instance, once a medical (e.g., colon cancer) or non-medical impairment (e.g., alcohol abuse) is located, supplemental information, including disorder definitions and descriptions, associated findings and symptoms, related treatments and medications, and mortality considerations impacting prognosis are provided. This makes ASCENT a great training tool because it not only delivers ratings, but the information used to determine ratings, says Elzeer.

Preparing for Take Off

Elzeer provided Great American Life's underwriters with an explanation of how the paper and electronic methods differ. This was necessary because the information provided in ASCENT is much more "extensive and expansive" than the information that was provided by the paper manual. This "allows underwriters to make more informed and competitive decisions," says Elzeer. And although ASCENT provides a greater wealth of knowledge it actually saves time in the underwriting process.

In order to underwrite policies that are considered outside its contractual agreement with ING Re, Great American Life must recieve an OK from ING Re. "Those would be policies over what Great American Life calls a facultative limit; it's about three percent of Great American Life's total business," explains Elzeer. ASCENT is used to expedite responses back from the reinsurer and lessen the amount of administrative costs incurred with the paper process.

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Case Study Closeup

COMPANY:

Great American Life Insurance Company,

Cincinnati, more than $6 billion in assets.

LINES OF BUSINESS:

Life and annuities.

VENDOR/TECHNOLOGY:

ING Re's (Denver) ASCENT.

THE CHALLENGE:

Make the transition from a paper to electronic underwriting manual.