External Data in Underwriting

Kevin PledgeCEO and FounderAcceptiv Inc.

Acceptiv Confidential

Traditional Application

Paper based, but may be converted to fillable PDFOpen-ended questions

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Reflexive questioning

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No Yes

No Yes

No Yes

No Yes

No Yes

Have you been told that glaucoma is due to another disease?

Term: TICI: TI

WP: TIADB: TI

Are you awaiting an operation or any investigations?

Term: +0CI: Remove Blindess

WP: DADB: +0

Has the glaucoma been treated?

Is your vision now normal in the affected eye or

completely corrected by spectacles or contact

lenses?

Did you have glaucoma in both eyes?

Term: +0CI: Remove Blindess

WP: DADB: +0

Term: +0CI: Remove Blindess

WP: DADB: +0

Term: +0CI: Remove Blindess

WP: DADB: +0

Term: +0CI: +50

WP: +100ADB: +0

Decision tree rulesClosed questions, i.e.

Ask a question, thena) make a decisionb) ask another question

Continue until a decision is made.

Data has high sparsity.

Now we have Digital Data

Can we enhance this with external data?

Can we replace blood with data?

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Digital Tools Available

Traditional Tools Modern Tools

Paramed visitMedical TestsMIBRx

MVR

Behavior SciencePersonal External Data

(incl. MIB, Rx)Non-personal External Data

Behavior SciencePersonal External Data

(incl. MVR)Non-personal External Data

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Risk

Medical Disclosure

Other Risks

External Personal Data – (1) MIB (2) MVR (3) Rx (4) Credit Score Data

(5) External non-personal data e.g. Acxiom, Environics, Cleanlist(6) Photo(7) Web fraud

7Acceptiv confidential

Assessment

Added value – benefit and costCustomer friendly – does it disrupt the purchase process?Integration – automated or manual?Dominant – widely accepted or exclusive?

MIB

Not 24 – 7Complex definitionsFeedback requiredCan’t be used to make a decision

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Match algorithmProtect against multiple applications?Identify non-disclosure

… but widely used

MVR

Conclusion*: Breakeven assuming MVR cost US $9 ~$40k Face Amount

MVR All cause Mortality – RGA 2012 9

MVR Severity Number of Deaths

Average Age

Relative Mort Ratio

Clean Record 50,949 43.4 95.4%

Minor Violations 13,977 38.7 93.7%

Major Violations 8,189 35.4 170.7%

Major Violations by age: 141% - 183%

Minor violations by number of violations:

# Violations 1 2 3 4 5 6 7 8+

Relative Mort Ratio 95% 95% 113% 129% 138% 153% 175% 193%

Rx

Not available in Canada

In US:Does not cover all prescriptions.Difficult to integrate, but worth the effort.

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Credit Score Data

Uses data collected for credit scoring

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Added value – cost per transaction (not per issued policy)

Photo

from Lapetus

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While traditional underwriting can take up to a month, CHRONOS delivers more accurate results in seconds

Used by

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Picture does not seem to affect the results

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External non-personal data

Likely smokerLikely enjoy outdoor activityLikely travel a lot

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Can you use it for assessment?

What version of the question should I ask?

Online Identity

Black listed IP addressesName check

Low cost - useful at start of application, but not critical

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Ask the questionmaybe supplement with external data

Summary

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Kevin PledgeCEO and FounderAcceptiv Inc.

Thank You

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