consider using mortality management technology systems as a
strategy to improve profitability, reveals a study unveiled at
industry body ACORD LOMA’s Insurance Systems Forum held in Las
Vegas in May.
The study was conducted by Transamerica Reinsurance, a US-based
unit of Netherlands insurer AEGON, and MajescoMastek, a US-based
unit of Mastek, an Indian IT company focused on the development of
insurance industry software and technology solutions
development.
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“While insurers historically have not invested in [technology]
tools and processes to manage mortality expenses, that could be
changing as insurers recognise the potential to increase profits
and reduce costs,” said Harold Apple, senior vice president of
VectorMastek, a unit of MajescoMastek.
This conclusion was drawn from the 50 life insurers surveyed for
the study on their approach to managing mortality expenses.
Highlighting the importance of mortality management, Transamerica’s
analysis found that an insurer can generate $4 million in increased
profit for every $10 million in new annual premium by reducing
claims expenses by 6.6 percent over the life of the block of
policies.
By comparison, Transamerica also found that improving productivity
by 10 percent in underwriting and new business processing generates
only $500,000 in increased profit for the same example.
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By GlobalDataThe study found that the technology-based mortality management
solutions insurers are considering are rules-based underwriting
engines.
These provide benefits including the ability to assess risks on a
real-time basis and review and audit decisions to, for example,
hone in on the number of underwriting exceptions in a block of
business.
