By Leslie Scism
Americans who want to buy life-insurance policies but are turned off by the often slow-moving application process increasingly have an option for bypassing blood and urine samples.
There is a catch. These customers will have to give life-insurance companies access to their private medical records.
Doctors, hospitals and other health providers have been putting consumers' medical information into computers for more than a decade, to try to lower costs and improve health care. Now, the data is becoming more widely used by life insurers, especially as the coronavirus pandemic keeps potential customers from visiting a lab or welcoming a paramedic into their home.
Recently, at least two large insurers -- Manulife Financial Corp.'s John Hancock unit and Massachusetts Mutual Life Insurance Co.'s Haven Life -- have announced new or expanded life-insurance sales platforms that incorporate this data. In addition, Verisk Analytics Inc. this week is launching a tool that uses algorithms to evaluate digitized records in real time to provide immediate assessment of an applicant in the form of a health-risk score. This means that human underwriters won't have to spend time themselves assessing the summaries.
Under the initiatives, insurers can avoid ordering up fresh tests and collecting reports from doctors. Historically, such traditional underwriting could take a month or longer. Insurers use medical data to identify diabetes and problems related to the kidneys, heart and liver that can lead to early deaths, among other conditions. The better the health, the less applicants typically pay.
"What we put customers through to buy life insurance is nuts," Brooks Tingle, chief executive of John Hancock Insurance, said of the traditional approach. Innovation is needed because "it's probably the hardest product to buy in the modern economy."
In June, Hancock launched an electronic application system, JH eAPP, that is aimed at reducing processing time from weeks to, in some instances, just minutes.
Insurers aren't the only companies using this data. Over the past year or so, Alphabet Inc.'s Google, Microsoft Corp. and other big tech companies have reached deals with hospitals for access to medical data, on the hunt for groundbreaking discoveries and potentially lucrative products.
Life insurers are finding the data increasingly accessible thanks to middlemen firms that sort out the technological hassles of obtaining the records and making them usable in insurers' computer systems.
Life insurers' adoption of the technology started out slowly partly because health-care information technology "is very complex and life insurers are notorious for their aging technology, so bridging this gap has been hard," said Dave Dorans, chief executive at Clareto, an aggregator of electronic records and one of Hancock's data suppliers.
"The onset of Covid has caused a huge spike in clients signing up," he said.
Insurers must obtain consumers' permission to obtain the material, whether the old-fashioned way or using this new digital approach, and it is protected by the federal Health Insurance Portability and Accountability Act.
Hancock's Mr. Tingle said a company survey indicated about half of consumers would give approval for the electronic version.
All of the firms involved in the initiatives say that they take protection of data seriously and comply with HIPAA. Life insurers also say they have experience storing the massive amount of medical information obtained through traditional underwriting.
Laura Lawrence, a furniture restorer in Cumming, Ga., said she was comfortable giving Hancock access to the electronic version of her health history when she bought a policy about two months ago. Its underwriters used results of a recent physical exam, sparing her the need to schedule a new one.
"The information is already out there in cyberspace" stored by medical providers, she says. Turning it over to insurers digitally "is probably more safe than having hard copies float around."
Some consumers say insurers' new efforts are overdue.
Beth Schramka, a financial adviser in Milwaukee, said she would have welcomed use of electronic records earlier this year, when Covid-19 shutdowns stalled life-insurance applications for herself and her fiancé at Prudential Financial Inc.
The couple started their purchase in February, but Prudential took until May to issue the policies, because of delays with the physical exam. "It was frustrating," Ms. Schramka said.
A Prudential spokeswoman said the insurer appreciates Ms. Schramka's "patience in awaiting the issuance of her policy." As the pandemic unfolded, Prudential ramped up use of electronic health records and believes they are "a good alternative to traditional exams, labs and medical records in many cases."
Verisk's "EHR Triage Engine" uses algorithms designed with input from biostatisticians, data scientists, medical researchers and others. The technology can evaluate the health records of an individual in less than a minute, said Maroun Mourad, president of Global Underwriting at Verisk. In only about 15% of cases will human underwriters still need to review the data, Verisk said.
Verisk also has a "Tobacco Usage Propensity Model," which employs audio analytics to try to identify smokers. Applicants provide a short snippet of their voice.
At Haven Life, digital lab results and medical-claims data have been added to a mostly online underwriting process that has been using algorithms for the past five years based on data such as answers on the application form, prescription-drug databases and motor-vehicle records. It sometimes requires blood and urine samples, as well.
Haven Life fast-tracked incorporation of the additional data in May as medical exams became difficult to schedule, it said.
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