The Life insurance sector is in need of transforming its kinda dowdy image. Maybe 2026 will be the turning point? Here are some thoughts from Cavendish Online;
For decades, pricing risk in life insurance was largely a matter of ticking through boxes: age, smoking status, occupation, declared medical history and other basic measures. Insurers would group people into broad risk bands and set prices that reflected the likelihood of a claim. It worked well enough, but it also left gaps between real behaviour and the way risk was assessed.
Today’s pricing picture looks different. Many insurance companies still rely on those core factors, but they are increasingly supplementing them with richer data and faster, smarter tools. That does not mean underwriting has moved completely online or that human judgement is obsolete.
A more nuanced view of risk
Instead of signalling a shift in theory, advisers are seeing the impact of these changes in real underwriting outcomes. Pricing decisions are less dependent on single data points and more influenced by how different pieces of information sit together.
Under older underwriting models, risk was assessed using a fixed snapshot. Age, occupation and declared medical history formed the backbone of most decisions, with claims history used mainly as a reference point. In practice, this meant that applicants with less typical work patterns, health histories or family arrangements were often assessed in broadly the same way as others, even when their circumstances were quite different.
Take a self-employed contractor as an example. Under older models, income volatility or gaps between contracts could trigger conservative assumptions, even if the individual had a long trading history and stable earnings over time. Today, underwriters can review that information alongside claims history and broader context, leading to pricing decisions that better reflect the real level of risk.
As a result, insurers are able to work with a broader mix of information. Claims information, historic patterns and application data can be reviewed together rather than in isolation. This does not remove judgement from the process, but it does allow underwriters to make decisions that feel better grounded in evidence rather than assumption.
Automation with purpose
For straightforward applications, automated underwriting can speed things up considerably. If a client’s answers fall within certain parameters, such as a clear medical history, clean claims record and predictable lifestyle factors, the system may reach a decision quickly, often in real time.
Faster decisions improve the policyholder experience and tend to increase customer satisfaction. But it is important to underline that automation is a tool, not a replacement for expert judgement. Complex cases, or those with unusual health histories, still go through manual review.
It helps to think of these tools like a second set of eyes. They standardise basic decisions and flag outliers for humans to take a closer look at.
New data sources and everyday behaviour
Some of the most interesting developments involve data sources that did not exist a decade ago. Wearable technology, for example, now offers insurers a window into everyday behaviour. Activity levels, sleep consistency and related metrics provide context that a static medical questionnaire never could.
Using IoT devices in underwriting is still emerging and not universal across all products. But when it is applied, it helps provide another layer of insight into lifestyle risk. It is not about surveillance or building a perfect picture of someone’s life. It is about adding texture to the risk assessment conversation.
Of course, not every insurer uses wearable data, and not all clients will opt into those programmes. But its increasing availability reflects a broader trend in the insurance industry towards data rich, context aware risk modelling.
Technology, compliance and fairness
As underwriting tools become more sophisticated, questions around governance and accountability naturally follow. Faster decisions and automated processes are only useful if insurers can explain how those decisions are reached and stand behind them with confidence.
As pricing and underwriting processes have become faster, scrutiny around decision-making has increased alongside them. Advisers are seeing this first-hand in client conversations, particularly when outcomes differ from expectations. Questions tend to arise not because technology is involved, but because clients want to understand why their application has landed where it has.
That focus on explanation has been reinforced by recent regulatory change. The introduction of the AI Act has underlined the need for insurers to be clear about how automated decisions are supported, reviewed and, where necessary, challenged. In practical terms, that has encouraged a cautious approach to full automation.
Rather than relying entirely on systems to make final calls, many insurers have built processes that combine speed with review. Straightforward applications can progress quickly, while cases that involve unusual disclosures or inconsistencies are passed to underwriters who can apply judgement where data alone is not enough. That approach reflects a simple reality: efficiency only works if confidence in the outcome is maintained.
The customer journey in a digital world
For many clients, the most noticeable change is how much less drawn-out the process feels. Fewer repetitive questions, faster decisions and clearer updates mean there is less waiting and less uncertainty at each stage.
Customer support functions have also benefitted, with data flowing more seamlessly between underwriting, servicing and claims teams.
It is worth emphasising that those improvements are often subtle and behind the scenes. Clients do not always see the technology directly. They see a more responsive journey. For advisers, being able to explain that distinction helps manage expectations and fosters stronger client trust.
Trends across the insurance market
Looking at the broader market, a few trends are becoming clear:
- Carriers are investing more in big data platforms to support risk pricing
- Fraud detection is increasingly powered by analytics that spot unusual claims patterns early
- Automated underwriting continues to expand, but often with clear lines drawn around what remains human oversight
These trends are not fads. They reflect commercial realities. Insurers compete on speed, accuracy and customer experience. Better pricing and faster decisions are not just technological achievements. They are business imperatives.
Where advisers fit in
By now it should be clear that advisers remain crucial. Technology does not erase the adviser’s role. It reshapes it. Advisers interpret outcomes, help clients understand pricing decisions, and support them when experiences are not straightforward.
When technology speeds up part of the process, it is the adviser who keeps the conversation grounded. Whether explaining why a particular loading applies, or why a decision was reached faster than expected, advisers provide context that machines cannot.
Looking ahead, advisers who understand the practical impact of these tools, without overstating their capabilities, will be best placed to help clients make informed decisions in a changing landscape.
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