How COVID-19 revolutionised the way we assess Life Insurance applications

By: Petrie Marx, Product Actuary at Sanlam Individual Life

We’ve seen two years of digital transformation in two months,” said Microsoft CEO Satya Nadella, reflecting on doing business during lockdown in March and April 2020. 

His words ring true across industries, including the insurance industry where many of us have very quickly learnt to conduct meetings over videocalls, connect with clients remotely and more.

Another transformation that’s taken place in insurance: medical underwriting for new life insurance applicants. To avoid burdening healthcare systems, and following consultations between our Chief Medical Officer Dr Morkel and the National Institute for Communicable Diseases and the Financial Sector Conduct Authority, Sanlam had to change the way in which medical underwriting was conducted for new clients.

So, we devised a new underwriting model that kept continuity going where we still kept declarations and asked underwriters to assess on the basis of answers provided, on the assumption that some medical screening tests can be provided later on.

New options as lockdown eases

But in the long term, this is not ideal nor sustainable. Therefore, since lockdown measures have begun to ease, Sanlam has reintroduced limited medical services and more options for clients who need to complete their medical requirements. These include clients being able to:

1. Access their own general practitioners who would be able to conduct the necessary medical tests;
2. Accessing pathology laboratories;
3. And accessing specially prepared Sanlam offices that have been adapted to house nursing staff to carry out medical tests in a safe manner.

Even though medical services are largely back, there are still some limitations. One of the underwriting services we typically made use of was travelling nurses that would visit clients at work or home. The option of nurses’ visits was initially not possible when medical services became available. Since then, revised regulations have allowed the safe reintroduction of nurses on wheels, if other options aren’t available, or the client is considered vulnerable to other co-morbidities. “Sanlam also offers a limited service of travelling doctors, which are now also allowed to operate again under similar protocols.

We also deal with a number of service providers such as pathology and walk-in centres for bloods to be taken. We have decided to also house them in Sanlam offices that applicants can visit countrywide to conduct the necessary tests.

Are stricter measures in the future to be expected?

Even though medical tests have had to change somewhat during lockdown, stricter measures for underwriting risk have not been imposed by Sanlam. There’s no policy, for instance, to accept fewer clients or to stop accepting clients over a certain age. Premiums have also not yet increased.

However, the application process itself has become slightly more cumbersome in light of those who tested positive for COVID-19 or are currently experiencing symptoms. We’ve added more questions on testing positive for COVID-19 and whether new clients are currently experiencing symptoms.

We also ask clients if they have travelled to another country and those extra risks are now also considered on new cases.

If clients have tested positive, we will postpone their application for a short while. We will only do the underwriting once we know for certain what the outcome of the COVID-19 exposure is.

Two key developments

The learnings from COVID-19 will accelerate two key developments within Sanlam, namely the use of business intelligence and the use of alternative data sources, which could in future include access to medical aid and National Health records.

This will be a good thing. As we get alternative data sources to replace traditional medical testing, it may have a positive effect on the ease of doing business with life insurers and make it less cumbersome to apply for life insurance.

Sanlam is, however, unlikely to go so far as to introduce self-testing kits. For underwriting you need something consistently applied and verifiable, so I doubt self-testing will ever be an option.

One thing that will never change: our clients’ need for peace of mind – something that correct cover and financial advice can offer them. Whatever happens post-COVID-19, Sanlam’s commitment to covering its clients appropriately will never change. 

You’re well positioned to help your clients achieve some certainty through risk cover even in these uncertain times.