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INDUSTRY INSIGHTS & EXPERTISE

The Pros and Cons of Impairment Specific Calculators for Underwriting

For the last several decades, scientists have been dedicating their careers to trying to duplicate the human brain through computers and machinery. Algorithms, artificial intelligence and machine learning have all come close - but are still not quite there. There are many automations and tools used to make processes and operations easier, faster, more efficient. But are they necessarily better? When it comes to algorithms and calculations, there’s still the trouble of dealing with nuances and complexities of exceptions. Circumstances where the human brain just cannot be replaced. This situation is true for several professions, including a life underwriter.

Automating the Underwriting Process

As stated previously, there’s no stopping technological development and no slow down in attempts to apply technology to every industry. Many life underwriting service providers and life insurance companies have developed and use impairment-specific calculators in their underwriting process.

These calculators are generally pre-configured based on the user’s underwriting guidelines and pre-established rules that evaluate input and apply pre-determined underwriting decisions including things like: automatic approval or declination, whether to request additional information from third-party sources, or whether the case should be passed onto an underwriter.

Sacrificing Quality for Consistency

Unfortunately, there are substantial issues with the use of impairment-specific calculators for the life expectancy underwriting process. While these types of calculators create a degree of consistency in the underwriting process, they also ignore the fact that, in impaired risk and micro-longevity underwriting, there are often several interacting issues and interrelated factors influencing the subject’s mortality risk. According to the founder of the International Underwriting Congress, automation in underwriting "flies in the face of the indisputable reality that no two cases are ever identical.” He goes on to say that:  “Striving for consistency with calculators inexorably begets missing the forest for the trees.”

By focusing on consistency, underwriters are ignoring the best possible decisions for each client and instead looking for the simplest solutions.

No Calculations for Complexity

For life expectancy underwriters, less complex impairments such as hypertension or arthritis can be assessed relatively easily. However, as the complexity of the case and number of impairments increase, the ability for a set of impairment-specific calculators, or an algorithm to discern the relationship between impairments and their meaningfulness decreases. Impairments like cancer and certain degenerative diseases have too many unique risk factors for a calculator to take into consideration correctly as can a trained, experienced life underwriter.

In the words of a well-known underwriting expert, “Calculators are designed to assist the underwriter’s assessment of the risk, not to replace the underwriter’s judgment and experience. Underwriting is a tremendous skill and art, as close to clinical medicine as you can get, and I think underwriters should celebrate and cultivate that art as much as possible.”

Taking a Holistic Approach as a Life Underwriter

When searching for underwriting that takes an accuracy-driven, individualized approach - calculator-driven assessments are not what you’re looking for. In fact, automated impairment-specific underwriting calculators are quite the opposite of elite, expert underwriting. By definition, underwriting is a holistic exercise that considers everything that impacts the mortality risk associated with each individual subject. ISC Services takes a comprehensive approach to every case it reviews. To learn more about ISC Services’ life expectancy assessments, download an example report below.

See a Free Sample LE Report

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