Insuring Speed to Market

Before issuing life insurance policies, insurance companies typically turn to underwriters to run time-consuming background checks on prospective clients. The underwriter checks medical, government and credit sources, and enters the results in its calculation of risk. But that involves reviewing reams of paper documents as they became available, a process that can take weeks or months. By that time, anxious clients may pull out.

"The number of policies not taken goes up as the length of time to close the deal expands," says Scott Neumann, e-Nable's chief technology officer. "It gets very high when numbers go into 60 or 90 days." According to the American Council of Life Insurers, more than 8 percent of all life insurance applications were not taken by the customer in 2000—a lot of money considering that insurers collected a total of $35 billion in premium revenues from newly issued policies that year.

One of the databases underwriters invariably check with is MIB Group Inc., a consortium of 600 U.S. and Canadian insurance companies founded in 1902. Based in Westwood, Mass., MIB's database contains the records of 120 million people—the individual life, health, disability and long-term medical care information previously reported to MIB's members over the past five years. Ninety-five percent of the life insurance policies in North America are issued only after insurers check with MIB.

In 1999, MIB founded e-Nable Corp. in hopes of using XML to allow underwriters to process life insurance checks more rapidly. The goal: to save some of that lost business and reduce the chance that clients might misrepresent their medical conditions. Using the insurance industry's XML standards set by ACORD, the Association for Cooperative Operations Research and Development, e-Nable's service rapidly preprocesses—and in some cases approves—life and medical insurance applications before they're actually submitted to underwriters for full analysis. About 13 percent of the dollar volume of life insurance is submitted to be checked by e-Nable's system against the MIB database, according to e-Nable, and up to 40 percent of a company's applications can be approved immediately.

But while the XML system provides application processing efficiencies, says Neumann, the real savings come in speed. E-Nable's own study suggests that insurers can save between 20 percent and 45 percent of the cost of processing an application. "We have been doing everything by hand, preparing and underwriting applications," says Jeanie Herod, director of marketing for Guaranteed Quotes, an Edmond, Okla.-based life insurance preliminary underwriter and an e-Nable customer. "Requirements that would normally take us six to eight weeks can get done in two weeks through e-Nable."

How soon will it take to expend the virtues of e-Nable's services to the rest of the industry? "Most of the industry is still paper-based," says Neumann. "We are just starting to see companies move into significant implementation of XML. Life insurance companies are not the quickest technology adopters."