A new risk calculator which claims to predict the probability of death within the next five years by asking men many cars they own or drive and women how many children they have could shake up the way underwriters and actuaries assess risk for life insurance.
The
Ubble tool is designed for those aged between 40 and 70 and simply asks you to answer between 11 and 13 questions depending on whether you are male or female.
While it is pitched at indivduals, researchers and policy makers to provide incentives for either lifestyle changes or public health advice, head of business development at
Munich Re UK & Ireland, Lee Lovett, says the life insurance industry could learn a lot from Ubble.
“Is this tool a bit of a gimmick? Certainly not,” Lovett said in online health insurance and protection market magazine
Cover. “It uses a very large UK database and analyses numerous variables to assess how closely they are associated with mortality risk.
“It many respects it works a bit like an automated underwriting rules engine that we see in use at most of the UK life insurers.
“The main difference is that the outcome is a probability of death within five years, rather than a formal underwriting decision.”
Lovett said some of the questions asked, such as speed of walking, were surprising but turned out to be an accurate indicator of mortality.
“Perhaps this will provide some food for thought for life insurers as they continually seek to fine-tune and improve their underwriting processes and the use of relevant information for risk assessment
Lovett said that given most life insurance policies will run for typically 20-25 years Ubble’s timeframe of five years is an obvious limitation.
“There is some subjective assessment within the questions asked, for example a question for both genders that asks for a personal assessment of your own state of health – given the fairly obvious impact on the outcome (especially if the outcome were cheaper life cover) it’s easy to see a possible weakness in this type of question,” he said.
“Having said that, other analyses have shown that the reliability of this type of question can be tested against various other answers given and it can be more accurate than might be expected.
“If the next Ubble update looks at survival probabilities for 10 years or more then this will suddenly start to look far more significant,” he said. “Watch this space.”
