Prudential Life Insurance of Korea (Prudential of Korea) has automated 40-50 percent of new policy underwriting using FICO technology, a considerable lift from the industry standard of 4-5%.
The FICO solution not only revolutionizes Prudential of Korea’s customer approval times and policy accuracy but also reduced its underwriting cost dramatically.
This business transformation and innovation has seen Prudential of Korea win FICO’s 2015 Decision Management Award for Analytic Excellence, which is independently judged by leading industry experts.
Just a year after deployment of FICO’s analytic and automation solutions, Prudential of Korea has automated 40-50 percent of policy underwriting. Not only has this improved efficiency and accuracy in the company’s underwriting process, it has seen overall costs drop by 70 percent with medical examination costs slashed 65%.
An underwriter typically needs three years of training, but Prudential of Korea was experiencing high growth and therefore a significant skills gap was developing. Prudential of Korea sought to address this by developing a solution that would automate the most straight-forward policies. By automating the routine portions of the underwriting process, Prudential of Korea could focus its expertise on more complex underwriting details, ensuring that customers were still receiving excellent service.
Prudential of Korea used FICO® Blaze Advisor® decision rules management system to automate more of its underwriting. The project was completed in just six months and started to deliver results and a return on investment quickly. Today the percentage of contracts that are automatically underwritten has increased tenfold, from 4-6 percent to 40-50 percent since the implementation of the FICO system. This has freed underwriters to focus on the more complex contracts.
Prudential of Korea also used FICO analytics to develop more sophisticated and profitable risk calculations. This meant looking at a large number of factors beyond the typical data around age and medical history.
Before the company turned to FICO, its underwriters were evaluating contracts based on five or six factors. With FICO® Model Builder, Prudential of Korea evaluated 250 factors to find the 30 most predictive factors, allowing the underwriters to work more effectively.
Financials, ethics, lifestyle habits, occupations and other details that help segment people at different risk levels are now part of the actuarial process. The modelling of the data also revealed what information wasn’t important. Using FICO® Model Builder, Prudential of Korea determined the correlations of different criteria and built the models that are used to score every applicant.
This was very important in contributing to the 65 percent drop in medical examination expenses, as previously, when a customer required further evaluation, they went through a medical test. This was a significant cost to the company, as 15 percent of applicants would need to be tested. Using analytics, Prudential of Korea is better able to assess risk, and now only 5 percent of customers need to go medical exams. This reduction in medical exams greatly improves the customer experience and makes it much more convenient for the customer to obtain the insurance protection they desire.
Joonyong Choi, Head of R&D Underwriting at Prudential of Korea, said, "FICO’s capabilities help to differentiate us from our competitors through better risk assessment as well as speedier approvals for simple contracts.
"The use of FICO solutions has also greatly enhanced the role of underwriters within the organization. They are excited to work on ways to improve our offering even further, and to find and implement new ideas that support our product development."
Prudential Life Insurance of Korea, established in June 1989 as a 100% foreign investment corporation by Prudential Financial Inc., holds approximately US$11 billion worth of asset as of December 2014.
Under the vision of becoming the most trusted company, Prudential of Korea first introduced need-based financial planning and Life Planner system into the Korean market and has occupied top ranks in major management indicators in the industry. Prudential of Korea provides comprehensive financial solutions covering from death protection to longevity risks for customers to achieve their financial stability and peace of mind.