Automated underwriting in Japan

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27 April 2017

Use of automated underwriting systems in Japan on the increase

Results of the 2nd market research report announced at conference regarding New Policy/Underwriting Process

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Article source: Insurance Daily Paper | 17 February 2017 
Published with permission | Read article in Japanese (PDF, 974 KB)

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On February 1, Munich Re Japan Life Branch (Life Reinsurance) and Munich Re Automation Solutions, a provider of automated underwriting systems, held a conference at their office in Chiyoda-ku, Tokyo to report their market research results regarding new policy/underwriting processes and automated underwriting solutions. Shinya Okazaki, Manager of Underwriting, Munich Re Japan Life Branch (Life Reinsurance), explained the results of the questionnaire study and current industry trends to the 27 life insurance companies that participated in this conference. The research revealed that more than half of the life insurance companies in Japan will complete implementation of automatic underwriting systems in near future.

 

In the opening address of the conference, Patrick Sallin, CEO and Representative of Munich Re Japan Life Branch, first extended his gratitude to the companies that responded to their questionnaire. He pointed out that automatization of underwriting assessment had drastically increased since the last research conducted four years ago. He expressed the view that, “Automatic underwriting systems have transitioned from a “beneficial” to an “essential” tool.” He also mentioned that the next step would be the automatization of insurance claim appraisals, saying that, “Our goal is to find a pioneer in the insurance claim appraisal system in Japan who would be willing to work with us in taking the next step forward."

Mr. Okazaki subsequently addressed these research results. He stated that he believes “this research accurately reflected market trends regarding the current automatic underwriting process” because 27 of those companies that responded to the questionnaire accounted for approximately 65% of the life insurance carriers in Japan and the premium income of these companies accounted for 79% of the total premium income of the insurance industry.

Mr. Okazaki went on to say that respondents recognized that automatization of underwriting processes was an effective approach in helping them to continue to grow and attain their business goals, and the reasons that some companies had not implemented an automatic appraisal system included difficulties in securing an adequate budget and/or resources as well as insufficient proof of the cost-effectiveness of such a system.

Survey participants attend conference in Japan

Survey participants at the conference held in Munich Re Japan offices

Automatization of insurance claim appraisal on the radar

In the second half of the conference, Alex Isted, Head of Claims, Asia Pacific, Middle East and Africa (Life) at Munich Re and Alexandra Hubbard, who has engaged in construction of claim appraisal guidelines at Munich Re Australia, delivered a lecture under the theme of “Challenge to efficient claim appraisal process: Claims Rules Engine (CRE).”

 

As an innovation leader of claim appraisal processes, Munich Re Australia released a pilot version of CRE in Australia in December 2015. According to Ms. Hubbard, CRE consists of 1) sorting of claims (triage function), 2) data management and 3) construction of most appropriate rules. She explained the benefits of CRE by using actual examples.

 

In Australia, they used to take roughly 45 days for the primary assessment following the submission of a disability income insurance benefit claim before implementation of CRE. After implementation of CRE, the primary assessment was able to be conducted on the same date of claim submission. Previously, it also required about 18 months for a disability benefit payment. Now, however, it only takes 3 months for the insured and insurance carrier to agree upon the payment. CRE has enabled
a cost reduction in Australia equivalent to 650,000 yen* per disability income insurance claim. Ms. Hubbard expressed her belief that “CRE will help to standardize operational processes and also contribute to improvement in quality of operations.” Mr. Isted expressed similar confidence saying, “We started with automatization of the benefit processing of disability income insurance because that type of insurance business recorded hefty losses throughout the industry in Australia. Now, given the success in construction of an operational framework for such complicated insurance, I believe that construction of comparable frameworks for other products (such as compensation for death) is very possible.”

 

*In Australia, disability income insurance products include coverage for rehabilitation programs in addition to financial compensation as benefits. CRE enabled insurance carriers to provide coverage for rehabilitation programs in an expeditious manner and, thus, the length of time out of work was reduced in some cases.

For more information on this topic please contact

Yoichi Hayashi T: +81 3 4550 1550 E: Yhayashi@munichre.com

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