Understanding AI’s Impact on Group Health Underwriting: The Carrier Perspective

The Gradient AI Team

Understanding AI’s Impact on Group Health Underwriting: The Carrier Perspective

Artificial intelligence is being discussed over many media platforms and across multiple industries. But as it pertains to Group Health Underwriting in the Carrier space, who is using it and why? How are underwriters using data, coupled with artificial intelligence and advanced analytics, to win new business and optimally manage their book of business?

 

Gradient AI recently sponsored a webinar, “Exploring the Impact of AI on Health Carrier Underwriting: Expert Perspectives” hosted by Becker’s Payer Issues, that explored these questions and more.

 

Our expert panelists were:

 

Mike Harris has over 35 years of industry experience and in-depth knowledge of the fully-insured, ASO, and Stop Loss business. Jay Sheehy has an extensive background in health benefits, underwriting and product innovation. Prior to joining Gradient AI, Jason Oswald spent 15 years in health insurance actuarial and underwriting roles including managing the underwriting department for a Regional Payer. These three industry practitioners each brought a distinct perspective to the conversation.

 

Below, we’ve summarized the important highlights from the engaging 45-minute panel discussion.

                 

Insights from the Webinar “Exploring the Impact of AI on Carrier Health Underwriting: Expert Perspectives”


In this on-demand webinar, the panelists provided a unique view of AI in the Group Health Carrier space and shared their first-hand experiences with the AI in their own companies.


The discussion focused on these 6 questions:

  1. What is driving Carriers to consider AI in Group Health Underwriting?
  2. What challenges are Carriers trying to solve with AI?
  3. What impact has AI had on Group Health Carrier underwriting? 
  4. What results have you seen since integrating AI? 
  5. How did you handle change management when implementing AI?
  6. What is the future of AI? What advice do you have for other Carriers considering AI?

 

Let’s dive deeper into these discussion points.

 

1. What is Driving Carriers to Consider Using AI in Group Health Underwriting?


The panelists discussed how Health Carriers are looking to gain deeper insights into group risk to make better and faster underwriting decisions. They described how AI can help Carriers capture more business, expand business opportunities, and improve overall plan performance.

 

The panelists agreed that by leveraging AI, insurers can speed up decision-making, prioritize favorable risks, and manage less desirable risks more effectively. This approach not only optimizes the workflow but also ensures that resources are allocated more strategically, leading to better outcomes for both the insurer and the insured.

 

Jason Oswald believes that “being able to get a decision faster moves the good risk to the top of the pile and allows Sales, Underwriting, and Management teams to focus on winning those groups, while bad risk gets de-prioritized because companies do not have unlimited resources and time.”

 

2. What Challenges Are Carriers Trying to Solve with AI?  


While the underlying goal across Group Health Carriers is speed, accuracy and profitability, the specific challenges or objectives for implementing AI can vary from company to company. This can range from planned expansion and growth into new markets or industries or bolstering an understaffed or inexperienced underwriting team.

 

BlueCross BlueShield of South Carolina (BCBSSC)’s Mike Harris was looking for alternative ways of looking at potential risk, particularly in the under 150 market, and for ways to fend off the competition. “As a market leader, we have a target on our backs,” said Harris. “And the market is very competitive. The challenge, particularly with smaller groups, is you get limited data and experience. We needed a better way to evaluate risk and sales, and underwriting needed to better validate where we needed to be aggressive.”

 

Jay Sheehy of Gravie, a new but growing Payer, had a unique challenge and advantage. Unlike larger Carriers who have years of usage with a legacy system, Gravie needed to build out their processes and tools from scratch. “We really needed to address scale,” said Sheehy. “We were trying to have the appropriate balance between machines (AI) and humans. We really want our underwriters to focus on the financial decision-making part and let the machines do a lot of the analytics.”  

 

3. What Impact has AI Had on Health Carrier Underwriting?  


Providing a broad industry perspective, Jason Oswald reiterated Jay’s comments about the value of combining Machine Learning, AI, and underwriters. AI helps identify groups to focus on and can even slot them into risk tiers. Underwriters can then use that as a data point and push more quotes through at the favored risk levels. “AI doesn’t run the ship,” said Oswald. “It doesn’t operate on its own but when paired with a skilled underwriting team that has been trained and understands the tool, it helps gain efficiencies and allows the team to focus time and resources on the groups you want to win.”

 

Collectively, the panel emphasized the importance of getting as much data as possible to make accurate risk predictions, while the lack of data makes underwriting that much more challenging. AI can not only help fill in blind spots but reduce time and resources by helping guide risk projections. “Predictive models can give you 300 different scenarios in minutes as opposed to an underwriter trying to manually calculate even one scenario in an hour,” said Jay Sheehy. “Having more data in real time is essential for doing a good job for the customer.”

 

4. What Results Have You Seen Since Integrating AI?


For Mike Harris, leveraging AI was a great opportunity for BCBSSC to figure out how to target specific accounts under 150 and to carefully select which business to write. AI enhanced whatever data the customer or consultant provided. “With Gradient AI’s tool, it just opened the door for sales to go to our underwriting or actuarial teams when we needed to get extremely aggressive on a new piece of business,” said Harris. “Having the Gradient AI scores, coupled with the information from the prospect or consultant to evaluate the risk, gave us an extra viewpoint to make the proper risk assessment.”

 

BCBSSC began using AI on a test basis before expanding its use. “We initially rolled out the Gradient AI tool for just one of my segments, chamber block and associations,” said Harris. “In year two, my underwriting and actuarial teams said, ‘let’s use this for all of your segments.’ I can honestly tell you that would not have happened if we were not seeing the value of the program.”

 

Gravie’s Jay Sheehy felt measuring results based on turnaround times, accurately loading data, and running risk models quickly through their actual risk predicators was extremely important. He shared Gravie’s improved outcomes as a result of using AI:

 

  • Consistently beating their 6-day turnaround time goal 
  • Notable improvement in data load times and accuracy
  • Repriced and refined risk projections for over 200 groups

 

“Our initial pricing was accurate to start with,” said Sheehy. “But AI showed us some areas where we may have been a little too conservative and had room for improvement. Plus, I think our underwriting team actually has fun. They realize they are not just calculating numbers; they are empowered to make financial decisions.”


5. How Did You Handle Change Management When Implementing AI?  


“From a sales perspective, I think the main pushback initially was the perceived extra work involved,” said Mike Harris, whose sales teams run the scores and present them to the underwriters as part of the RFP package. “But once they got comfortable and they recognized the speed and accuracy the AI tool delivers, I think they were very comfortable.”

 

As for the underwriting team, Harris noted “Our underwriters were hesitant at first, but once we did a test segment and they saw the results, they suggested utilizing the tool across all segments because they recognized the value of AI.”

 

Jay Sheehy said that Gravie did not have the same change management challenges as more mature companies. “I was employee 75 when I started,” said Sheehy. “We are now up over 650 employees and so as a company, AI allows us to scale more accurately and more effectively. We had the underwriting team be a big part of building our process with AI, so they don’t view AI as a solution, they look at AI is as their solution.”  

 

6. What is the Future of AI? What Advice Do You Have for Other Carriers Considering AI?


The panelists wrapped up the webinar with these insights:

 

Jason Oswald: “AI is here to stay. It behooves Group Health Carriers to investigate and engage at some level. Companies need to evaluate how they might use AI to match market goals, how they integrate it based on the experience of their team as well as the level of technological investments they are willing to make.”

 

Jay Sheehy: “At Gravie, we vigorously tested the technology and how it was used and then trained individuals on how to use it. We also recognized it is just one tool of many to get the best results… We’re just scratching the surface on how you really provide better financial protections though AI. And that’s just one element. How do you use the information from AI to better understand what an employer and their members truly need and customize solutions and products that provide significant value?”

 

Mike Harris: “I agree with Jay in that we are just scratching the surface with AI. We will be able to leverage AI to create particular programs that will help employers with their specific employee needs and with more intelligence and more data yet to come. There will be unlimited opportunities.”

 

To Learn More, Listen to the On-Demand Webinar

 

>> To hear more from the panelists about AI for Carriers, listen to the on-demand webinar, Exploring the Impact of AI on Health Carrier Underwriting: Expert Perspectives, hosted by Becker’s Payers Issues, and sponsored by Gradient AI.

 

About Becker’s Payers Issues

Becker's Payer Issues is the leading news organization covering the U.S. health insurance industry. The editorial team delivers daily breaking news, business analysis and expert interviews across the evolving insurance landscape, delivering the latest need-to-know information for the industry's executive leaders.


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