Absa Life is offering qualifying Absa Bank clients life assurance without the inconvenience of filling in a lengthy questionnaire or going for a medical check-up.
The life assurer has used “big data technology” to pre-qualify 700 000 bank clients for life cover. (“Big data” refers to any voluminous amount of data that has the potential to be mined for information.)
Jannie Venter, the managing executive at Absa Life, says the assurer has eliminated the need for traditional underwriting with questionnaires and medical tests, and can pre-qualify certain clients with its predictive underwriting solution, called Affinity.
However, only applicants who meet certain conditions, apart from being an Absa client, qualify to be underwritten through Affinity. The conditions are:
* A previous death, disability or critical illness policy must not have been issued subject to exclusions or premium loadings;
* You must not have suffered from, or have, the following conditions: heart attack, stroke, diabetes, cancer or Aids; and
* You must not have tested positive for HIV.
Applicants who answer “yes” to any of the above questions will have to be underwritten in the traditional way.
Venter says Absa Life spent two years developing an algorithm based on banking behaviour that predicts whether a client will qualify for its life cover. It looked for correlations between the risk and claims profiles of its 4.5 million assurance clients and the transaction patterns of Absa Bank clients. Based on what it found, it extracted certain factors, which were used to create the algorithm.
Absa Life is keeping the factors that went into the algorithm under wraps. However, Venter says that if someone is earning a salary every month, it indicates that he or she is healthy enough to work. Another indicator of good health is a monthly debit order for gym membership. Venter says Absa Life found there are other, less obvious, indicators of good health.
Clients who qualify through Affinity will take out an @Ease policy, which is the same comprehensive life assurance product issued to clients who are assessed the traditional way, Venter says. There are no premium loadings, additional costs or exclusions if clients are assessed through Affinity. The benefits available on @Ease include cover for death (up to R5 million), accidental death, funeral, physical impairment and retrenchment.
Venter says the biggest challenge in the life industry is verifying the health status of applicants. Traditionally, they have had to fill in a questionnaire and undergo a medical examination. However, a large proportion of these – as high as 85 percent in the case of Absa Life – end up qualifying for cover at standard rates. This means that life companies and their clients are doing a lot of work to identify “a handful” of people who must be put in a separate risk category.
He says Affinity is the first predictive underwriting solution in Africa and one of the first in the world. It was made possible because Absa has sufficient big data from its life assurance and banking divisions to establish correlations.