RGA Underwriting Initiatives

Jaime Correa CLU, FLMI

September 14, 2017

SVP, U.S. Mortality Markets Underwriting

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What We’ll Be Covering Today

RGA’s Focus on Initiatives

U.S. Underwriting’s Role with Initiatives

Key Initiatives

• DriverRiskSM

• TrueRisk®

Life

• ASAP

• Rx Scoring Model

• Digital Health Records

The Future of Underwriting

Q&A

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RGA’s Focus on Initiatives

Sharing risk with our clients through traditional reinsurance business

Leveraging our talents and spirit of innovation to develop new solutions that help our clients today

Analyzing trends and applying our expertise to stay ahead of tomorrow’s needs to support the growth of our clients and the insurance industry as a whole

Help our clients assess new risk management tools and take risks alongside clients

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U.S. Underwriting’s Role with Initiatives

U.S. Underwriting is comprised of …

• Facultative Underwriting

• Fac. Exclusives

• Underwriting Services

• Medical

These teams support RGA’s leadership position in a number of ways, including …

• Facultative underwriting support

• Development and active management of innovative underwriting services that benefit our clients

Initiative: DriverRiskSM

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Drivers with an MVR infraction experience higher all-cause mortality than those with a clean driving record1

The study noted that because the focus was on all-cause mortality, the additional mortality did not necessarily come from automobile accidents:

“It is possible that those who use cell phones while driving engage in other risky activities, thereby

increasing their overall mortality risk.” 1

1 RGA Global Research & Development Research Bulletin, May 2014

RELATIVE MORTALITY

Those with MVR infractions

compared to those with a clean record

Distraction-affected MVR infraction 137%

MVR infraction – other than distraction-affected 117%

Clean driving record 100%

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Even though the MVR is the traditional tool for validating driving records, there are limitations

They are expensive

Mismatches and bad driver license numbers

They don’t cross state lines

Includes pre-adjudicated violations (e.g., open tickets)

They omit violation dismissals and downgrades

They can even omit violation convictions (depending on the state)

They are subject to a data latency issue as violations progress through

the adjudication process

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DriverRiskSM has shown to be an effective indicator of MVR violation activity for the auto insurance industry

Proven to save auto insurance carriers on MVR expenses when used as an alert in front of the MVR order

Alerts to the presence of violation activity so a carrier knows when to pull an MVR or when to avoid an MVR

TransUnion’s court record-based traffic violation product is now available for the life insurance industry

$$

$$ $ $

$

$$ $

70-80% of drivers will have

a clean driving record

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They are less expensive

Crosses state lines for states in production

Includes pre-adjudicated violations (e.g., open tickets)

Includes violation dismissals and downgrades

Includes violations for non-licensed or foreign drivers

Court record data is less costly than a state MVR and contains unique insights into driver risk

Finds violations for drivers regardless of changes in name, address, and driver’s license

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Court records are the precursor to violations that ultimately populate the MVR

State MVR

updated

Driver fights ticket in

court

Driver pays

fine (pleads guilty)

Case management

system updated

Up to 1

month

1 day

5-18+

months

State MVR

updated

2 months

6-19+

months

~4 weeks

~4 weeks

Day 1

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Identify when applicants or policyholders have

ratable violations that meet your criteria

Customize alert criteria by: state, violation type, and

violation disposition

Avoid MVR orders for “clean” drivers without

violation activity

Receive an at-a-glance snapshot of all activity for

each driver: number of violations, number of ratable

violations, out-of-state violation indicator, and recent

conviction indicator

The DriverRiskSM Alert provides at-a-glance method for determining next action An enhanced court record violation data solution

AlertHit: At least one violation conviction was

found for the subject within the license key

search parameters

Not Found: No violations were found for

the subject within the license key search

parameters, AND the PII provided on input

was not verified

Clear Hit: At least one violation was found

for the subject within the license key search

parameters, but no convicted violations

were found, OR no violations were found

but the PII provided on input was verified

Alert Output

Initiative: TrueRisk® Life

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What is TrueRisk® Life?

A credit-based behavioral index highly predictive of mortality and lapse for use across the life insurance policy life cycle

A new piece of evidence that will transform the life insurance industry through unique insights into mortality and lapse

With the growing underinsured middle market, aging distribution group, and increasing consumer demand for instant transactions, insurance carriers need to quickly assess risk with a high level of confidence in a way that does not inconvenience the customer

A new source for improved risk selection, segmentation and efficient underwriting

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Filtering Down The Big Data UniverseFiltered to Get the Most Important Attributes

800 credit attributes that quantify risk

associated with access to credit.

Marketing

• Shopper (credit card transactions)

• Social media

• Household information

• Checking/savings

• IRS data

• Income, race, ethnicity

Public Records

• Criminal

• Derogatory records

• Court filings

Titles and Licenses

• Property ownership

• Professional licenses

Data not used in the model

25 credit attributes that quantify

behavioral risk associated with credit,

foreclosure, bankruptcy and eviction.

Credit data

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How the TrueRisk® Life Model Was Created

Built the model on 44 million lives and more than 3 million deaths

Started with more than 800 variables offering features of individual’s credit history

Selected variables that were:

• Most predictive of the outcome

• Stable over time

• Non-gameable

• Not too correlated with the other variables

Binary logistic regression

Model validated internally using an additional 30 million lives and 2 million deaths

Tested model using traditional mortality and lapse studies

Used a random holdout dataset of another 18 million lives and 1 million deaths

StartingData

Variable Selection

ModelProcess

External Validation of

Model

• Data comes from de-personalized 1998 credit archive (90% of the U.S. population)

• Model calibrated to actual deaths occurring over a 12-year period

TransUnion and RGA built and tested TrueRisk® Life on 92 million individuals

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TrueRisk® Life Presented as a Score from 1-100

Higher

Numbers

Higher

Risk

Lower

Numbers

Lower

Risk

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TrueRisk® Life DeliverablesProvides the transparent drivers behind the model

TrueRisk® Life Score1

Reason Codes2

Credit Report3

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Applications Within Life Insurance

Improved Risk Segmentation

• Fully or Simplified Issue Underwritten Environments

Accelerated Underwriting

Targeted Marketing

In force Policy Management

• Lapse and Mortality Insight

• Cross-sell or Upsell Existing Customers

• Engage Orphaned Policyholders

Initiative: ASAP

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What is ASAP?

Introduced in 2006, ASAP streamlines process for electronic submissions of facultative cases for immediate decision

ASAP currently offers 33 individual and 14 dual impairment options

Support and direct access to our underwriters available through the Facultative Call Desk

Winner of 2012 Best Innovators Showcase award for web-based underwriting process

On January 2016, the 100,000th case was submitted to ASAP

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ASAP Benefits

ASAP can improve placement rates and …

• Help recover underwriting costs

• Improve agent satisfaction

• Leverage RGA’s underwriting expertise and reinsurance capabilities in ways that benefit all parties involved

ASAP’s greatest benefits are higher placement rates as a result of …

• More competitive offers

• Fast, easy and secure case submissions

• Direct support from RGA underwriters via the facultative call desk

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Preferred Offers Now Available for Some Impairments

Preferred offers available on six (6) key impairments as of 6/12/17

• Abnormal A1C/blood sugar – no diabetes history

• Elevated triglycerides

• Foreign travel/foreign nationals

• EKGs

• Occupations

• SCUBA diving

Preferred offers will be available for up to 15 additional impairments by the end of 2017

Targeted impairments for preferred will not conflict with carrier’s current preferred guidelines for build, blood pressure and cholesterol

Initiative: Digital Health Records

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The Goal for Digital Health Records in Life Insurance

Better health data and better availability of health data

More efficient and effective model for delivering insurance, especially in the middle market

Enhance our capabilities using physician statements/reports

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Digital Health Records: Good News, Bad News

Good News: More Data

• Lifetime medical history

• Multiple sources

• Discrete data

• Records on demand

Bad News: More Data

• Volume of data (thousands of pages in some cases)

• Disparate formats, hybrid records

• New standards, vocabularies, etc.

• Access, sharing, matching

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Long-Term Strategy

Holistically assess the structured and unstructured data elements in DHRs

• Structured data (SNOMED CT, RxNORM, LOINC, CPT, vitals, age, and gender)

• Unstructured data (free-form text from the doctor’s notes, consults, encounters, etc.)

• Images (EKGs, x-rays, etc.)

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Our Phased Approach

Phase One - Score structured data

Phase Two - Mine free-form text with natural language processing (NLP) tools

Phase Three - Develop predictive models to holistically assess

Initiative: Rx Scoring Model

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RGA Pioneered the Rx Rules Concept

2009 mortality study goals

• Determine whether Rx histories are predictive of mortality

• Analyze effectiveness of drug risk hierarchies at segregating mortality

Largest Rx mortality study performed at the time

• 1.1 million insurance applicants

• More than 21 million distinct prescription fills

• Over 2,500 deaths between 2005-2007

Published in March 2009 issue of On The Risk

Proving the Protective Value of Rx Histories for Life Insurance

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Developed the RGA Rx Scoring Model

Severity-based scoring system (1-100) for all drugs on RGA-hosted system

• More than 65,000 combinations scored using multiple variables, including age, gender, route of delivery, time since last fill, number of fills, and physician specialty

Provides up-to-date listing of Rx information via leading third-party provider

System and rules updated on an ongoing basis

Team of Rx experts, including underwriters, medical directors, actuaries, technologists

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Next Generation of the RGA Rx Scoring Model

Applies a predictive model to generate a holistic view of the Rx report

Factors in drug-drug combinations and alternative indications

Can be customized by client and product

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Benefits for Client Companies Using RGA’s Rx Scoring

Minimizes costs by saving underwriters’ time

Enables faster decisions

Increases protective value by uncovering non-disclosed medical conditions

Flags concerning medications

Eliminates costly human mistakes

Translates large volume of data into actionable information for an underwriter

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The Security of Experience. The Power of Innovation.

2009 2012 2013 2014 2015 2016 2017

RGA proves correlation between

prescription history and

mortality

RGA proves correlation between

motor vehicle records and

mortality

RGA publishes distracted

driving study results

RGA proves correlation between credit

behavior and mortality

RGA conducts experience studies on

$1.3 trillion of inforce life business in

the U.S.

RGA develops acceleration

program

RGA underwrites

its 3 millionth facultative case in the

U.S.

Rx Scoring Toollaunched

TrueRisk® Lifelaunched

Dynamic Risk SelectorSM

launched

DriverRiskSM

launched

The Future of Underwriting

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An Ecosystem of Opportunity

Future Advancements• Smoker detection

• EHR data

AURA• Automated underwriting engine

• Comprehensive evaluation

of TrueRisk® Life, Rx scoring,

MIB, MVR, labs, reflexive questions

Dynamic Risk Selector• Predictive model, TrueRisk® Life

and underwriting rules

• Accelerated underwriting

TrueRisk® Life• Behavioral index score

• Predictive of mortality

and lapses

Rx Scoring• Prescription history scoring

• Predictive of mortality

Proprietary and confidential. For internal client use only.

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What’s Next? Stay Tuned.

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