Optimising Underwriting Disclosure with Behavioural Economics

A large, established life insurance company operating in Australia, facing increasing scrutiny and regulatory pressure to improve customer disclosure rates in their underwriting processes, stemming from the Royal Commission into misconduct in the Banking, Superannuation and Financial Services Industry.

The client faced low customer disclosure rates in their personal statement application for life insurance, leading to potential revenue loss due to inaccurate risk assessments and increased regulatory risk. The existing application process was complex and confusing, hindering customers from providing complete and accurate information, and therefore increasing risk on the insurance book. They needed to simplify the underwriting process and improve disclosure rates across digital, paper and tele-underwriting channels.

This fractional role was led by one of our Maestros as the delivery lead.

• Behavioral Economics Review: Conducted a thorough review of the existing personal statement application, applying principles of behavioral economics to identify friction points and opportunities for simplification.
• Optimised Application Design: Redesigned the application with a focus on clarity, ease of understanding, and intuitive navigation. This involved:
  
  • Using simpler language and avoiding jargon.
  • Breaking down complex questions into smaller, more manageable chunks and steps.
  • Providing clear explanations and examples to guide customers.
  • Using visual cues and formatting to highlight important information through salience.
• Multi-Channel Implementation: Implemented the redesigned application across all three channels: digital, paper, and tele-underwriting, ensuring a consistent and user-friendly experience for all customers.
• Additionally in this project they created a Streamlined Vendor Selection:
  
  • Developed a streamlined vendor selection process creating RFP templates and reports, briefing and requirements workshops, vendor response, clarification and selection within three weeks. Offering a finalised vendor selection report that is robust with tangible metrics and analysis for an informed selection.

• Significant increase in Disclosure Rates: The redesigned application led to a substantial increase in customer disclosure rates, from 2% to approximately 10%.
• Potential Revenue Uplift: This improvement in disclosure rates translated to an estimated $1.25 million in potential revenue uplift, due to more accurate risk assessments and reduced policy cancellations.
• Reduced Risk: Improved disclosure reduced the risk associated with the insurance book, by ensuring policies were based on more complete and accurate information.
• Enhanced Customer Experience: The simplified application process improved the overall customer experience, making it easier for customers to understand and complete the application.
• Streamlined Vendor Selection: Established a streamlined vendor selection process creating RFP templates and reports, briefing and requirements workshops, vendor response, clarification and selection within three weeks. Offering a finalised vendor selection report that is robust with tangible metrics and analysis for an informed selection.