Today, most actuaries still apply mortality assumptions based on a few risk characteristics, such as age, gender and smoking status. The assumption sets are normally separated across insurance products and might include three to five underwriting classes, even when there could be hundreds of them in the real world.
In the future, we can easily picture how the digital footprints we leave online, and those tracked by “smart” devices, can be used to provide more pleasant customer experiences through simpler processes and/or more refined risk-based pricing analyses. We already see signs of these changes: Sun Life Canada loosened its medical underwriting requirements based on results from claims behavior analysis, and Aviva America is experimenting with identifying potential health risks through online purchasing behavior.
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