Royal London has partnered with mortgage and protection adviser L&C to develop a life insurance application service called Streamlined Mortgage Protection, which uses advanced machine learning algorithms to simplify the underwriting journey.
The insurer said the new service makes it easy for customers to buy protection as part of the mortgage sale.
As part of the initiative, Royal London has developed an underwriting scoring engine using predictive analytic techniques to remove the friction created by the traditional underwriting approach.
Data collected for the mortgage fact find is used by the scoring engine to make an instant decision on life cover eligibility as part of the mortgage advice conversation.
The application process features only three medical and three lifestyle underwriting questions, compared to more than 30 for a traditional life insurance application.
No medical tests or additional medical evidence is required and all customers receive an online, immediate decision.
The prediction is that more than 80% of customers will be accepted. Customers who are ineligible are able to apply using traditional underwriting.
Impact of regulation
Changes to the way the mortgage market is regulated has increased the time it takes to give mortgage advice.
Royal London said one side effect of these changes is that Mortgage Brokers can struggle to sell protection at the end of the mortgage sales process and many customers complete the mortgage advice process without purchasing protection insurance.
Debbie Kennedy, group head of protection strategy at Royal London said: “This innovation is part of our drive to improve the way customers can access protection cover. We have invested in new skills and technology to challenge the traditional underwriting approach.
“We believe this development will be pivotal to overcoming one of the biggest barriers to selling protection alongside a mortgage – the time taken to complete a protection application on top of a mortgage application. L&C share the same values and it has been great to work with a partner who is using new technology to help grow the protection market. We are looking to introduce critical illness cover to the service in the future.”
Lucy Brown, Head of Protection at L&C said: “We are delighted to work with Royal London in piloting what we think will be the first steps in revolutionising the protection market. Providing customers with a quick and seamless process, coupled with certainty of pricing and cover, can only help meet customer expectation and heighten their engagement. This will remove some of the sticking points that can ultimately result in borrowers being underinsured.”