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Progress isn't perfect, and that's especially true when it comes to human health. While our modern, more affluent societies have greatly reduced the mortality threat from deficiency diseases and viral infection, sedentary lifestyles and unhealthy diets have produced a spike in chronic disorders such as obesity, diabetes, and heart disease.
For life insurers, this ongoing population health shift is leading some to adjust product and service offerings. The growing market of people living with chronic conditions, who may have been deemed high-risk or even uninsurable in the past, demands cost-effective solutions. New treatments, new technologies, and new risk stratification techniques have produced remarkable advances in how chronic conditions are treated and population health is managed. This is especially true for serving people with diabetes — but life insurance has been somewhat slow to keep up.
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According to the World Health Organization, the global prevalence of diabetes among adults over 18 years of age is 8.5% (400+ million people), up from 4.7% in 1980. In 2015, an estimated 1.6 million deaths were directly caused by diabetes, and diabetes remains a major cause of kidney failure, heart attacks, and stroke. The good news: Diabetes can be treated and its complications and consequences prevented or delayed with diet, physical activity, medication, and regular screenings.
In some markets, life insurers are already serving diabetics effectively, particularly well-controlled diabetics. Product inclusiveness has expanded so that a person with well-controlled diabetes can be approved for coverage. And while this progress is certainly noteworthy, the diabetic population continues to grow and the opportunity for additional inclusiveness becomes ever greater. So the key question is: Where does the life and health insurance industry go from here and how do we get there?
Cast a Wider Net
Perhaps the most logical place for an insurer to start expanding services for people with diabetes is adapting existing products to be more inclusive. However, even this seemingly simple path to embracing a wider group of applicants demands considerable knowledge, skill, and experience.
The process typically requires evaluating underwriting guidelines with the intent to cast a wider net. In the past, metrics such as application age, time since diagnosis, and co-morbidities would exclude applicants from coverage. Now insurers are taking a second look and leveraging enhanced insights. .
The key is to do so intelligently — to be open-minded before immediately rejecting an applicant with diabetes, yet to make sure responsible risk thresholds are maintained. Devising effective mechanisms to measure that applicant's health — from simple quizzes to advanced risk metrics — can provide the necessary underwriting evidence. Once this process is established and proven sustainable, the next challenge is optimizing pricing accordingly.
Target the Market
Adapting existing products is one thing, developing targeted, diabetes-specific products brings a new level of sophistication. What benefits would best serve the target consumer (e.g. including disability cover for diabetes-related complication such as stroke, kidney failure, amputations, and blindness)? What are the underwriting guidelines? How do you measure health status and minimize anti-selection? How do you price these products to balance insurer risk and customer affordability?
Of course, these questions are interrelated. The most effective approach is to build comprehensive strategies across all elements to align with the needs of the diabetic consumer and deliver value beyond what that consumer would receive with a traditional product. This includes improving the customer experience. Rather than simply defaulting to the slow, invasive procedures traditionally required to underwrite diabetic applicants, for example, a more simplified underwriting process targeted specifically to this segment could reduce friction and speed policy issue.
