Life Insurance Harnesses Data to Fill the Coverage Gap
Carriers can assess risk more efficiently and accurately and provide a better service to customers with the smart use of data and analytics.
In 2022, Jena Kennedy lost both her parents. A few weeks after her father's death, her brother received a letter of condolence from a leading life insurance company. The carrier was contacting them to inform them that it held a life insurance policy from their late father naming the siblings as beneficiaries.
At first, her brother thought the letter was a scam. Their father had told them that he didn't have life insurance.
But Kennedy knew it was not. As a senior director, life insurance, with LexisNexis Risk Solutions, she was at that very time working with this leading life insurance company on data and analytics initiatives designed to help the carrier swiftly locate beneficiaries of policies that in many cases were decades-old and often forgotten by the insured individual. Now, she was seeing those same solutions play out in her own life.
"It took me a minute to process all the news, but in that moment, I realized what was happening," she recalls. "My dad had been a long-time employee of a major electric utility company, and this was probably a group policy he had through the company and had forgotten about."
She told her brother that it wasn't a scam and that her team had been working with carriers to help them do exactly what had just happened to them: "I explained that every month the carrier meticulously searches their significant book of business to determine when someone has died and then proactively reaches out to family members to let them know about their loved one's life insurance. That it's all part of 'keeping the promise'".
Not long after, a check arrived, something she describes as an unexpected "last hug" from her father.
The experience, she says, brought home the impact of her work - how the effective use of advanced data and analytics tools in life insurance means that more people will receive that 'last hug'.
Closing the Protection Gap
Keeping track of policyholders and beneficiaries is just one of the challenges facing the industry. Addressing the life insurance gap is another.
Some 51 percent of adult Americans own life insurance policies, according to research published in 2024[1] by LIMRA, the Life Insurance Marketing and Research Association. Meanwhile 42 percent - or an estimated 102 million Americans - say that they either need life insurance or need more of it.
That gap has grown in the last decade and a half, with the proportion of Americans covered by life insurance falling from 63 percent in 2011, according to LIMRA.
In its Global Insurance Report 2025[2], consultancy firm McKinsey highlighted the opportunity for life insurance carriers to improve customer experience. At present, processes are cumbersome, taking on average between 45 and 60 days to complete.
The good news is not only that the industry is actively working to address current deficiencies, but that those working in it feel a deep sense of responsibility to provide the best service for clients. The sector is driven by a commitment to "keeping its promises," Kennedy says, by helping relieve financial pressures at an emotionally challenging time.
Data analytics underpins these efforts in three key focus areas for the industry: broadening coverage; enabling faster and more accurate underwriting decisions; and serving bereaved families better when policies are invoked.
Playing Catch Up
In the past decade, life insurers have transitioned from having very paper-centric processes to increasingly adopting electronic methods. Justin Baker, associate vice president, life insurance underwriting solutions, LexisNexis Risk Solutions, has seen progress in his 20 years in the industry, but not nearly enough.
"Life insurance is typically slower to innovate than other parts of the financial services industry," he explains. "There are some good reasons for that, like only having one underwriting event in the policy lifecycle, being heavily dependent on mortality and interest rate assumptions, and making decisions today that can reverberate for decades. However, consumers are setting their expectations based on all their experiences across a multitude of industries. So, when they can get a mortgage faster than they can get the life insurance to protect them, it's not going to meet their expectations."
Debra Gangelhoff, vice president and general manager, life insurance, LexisNexis Risk Solutions, says that carriers understand the need for change, but are conservative. The aim of LexisNexis Risk Solutions, she says, is to meet carriers "where they're at" and help them manage their transformation. "I do think that there are many in the industry who want to innovate and change, but they have to be very careful about how they manage risk," she says.
The key to that, she adds, is having good, reliable information.
The Power of Data
There is no shortage of data available to help carriers make underwriting evaluations - the trick is harnessing it effectively so that decisions can be made quickly and wherever possible without time-intensive interventions, such as blood tests, which can be required to assess an applicant's mortality risk accurately.
This means combining traditional medical information with other behavioral indicators that provide mortality insight. That is where Baker sees the opportunity for the sector, bringing together what he describes as "leading and lagging indicators" to build up a unique and detailed picture of an individual's level of mortality risk.
A medical condition is a lagging indicator, because "the applicant has already experienced symptoms, they've gone to the doctor, they've been diagnosed, they're on a treatment plan." Leading indicators, such as smoking, however, highlight an issue in advance. Other leading mortality risk indicators that can contribute to a fuller picture include risky driving behaviors, criminal records and financial responsibility.
This data, marshalled and channeled through an efficient workflow, enables carriers to make better and faster decisions. In the case of a 25-year-old non-smoker with a clean driver's license and unblemished medical history, that could mean an accelerated underwriting process completed in days.
That benefits everyone. Low-risk applicants are spared a visit to the physician, while resources are freed up to investigate or research more complex cases. It saves costs for carriers and headaches for purchasers for whom there is much better customer experience.
"There is no shortage of data available to help carriers make underwriting evaluations - the trick is harnessing it effectively..."
Bringing Structure to Chaos and Complexity
Gangelhoff says this is where automation and data solutions really make a difference. Medical data in the United States is only partially standardized, with structured billing and administrative data mixed with highly unstructured clinical and real-time health data. What that means in practice is an applicant's full position must be drawn together from multiple sources that need to be unscrambled so the underwriter can make sense of them and trust them enough to use as a basis for decision-making.
Life insurance experts and data scientists at LexisNexis Risk Solutions develop products to unlock these vast, unstructured and complex data sets and transform them into assured and actionable information to support the life insurance carrier at every step of the process.
Its Life Insights platform, Gangelhoff explains, "has all of the pieces and parts and capabilities in place so that we enable the most flexible and fluid solution for the carrier."
This starts with a simplified data prefill solution that enables easy information capture from verified third-party sources and identity management tools that help prevent fraud. For a life insurer's customer or prospect, it means a better experience when they can more easily apply for a life insurance policy.
Then the company's LexisNexis® Risk Classifier solution provides access to the industry's most extensive data lake of public and proprietary records, encompassing vital mortality insights derived from behavioral and lifestyle factors and producing real time results that can be integrated into workflows to generate outcomes substantially faster. For the life insurer, it can mean being able to make an underwriting decision in minutes or hours rather than weeks.
"And where more medical underwriting is needed," Gangelhoff explains, "LexisNexis Risk Solutions offers the Health Intelligence platform, which provides the broadest network to source electronic medical records and can uniquely structure the data to be ingestible within a carrier underwriting rules engine - a transformation all life carriers are focused on these days."
In a transforming industry, AI inevitably has a role to play. But Baker says that in the cautious life insurance world, it's a case of evolution rather than revolution. "We are focused on innovating immediate, small use cases with minimal risks. As carriers get comfortable with the use of AI from a trusted solutions provider like us, then we can expand to the more complicated pieces, like automating assessments," he says.
Ensuring Equitable Access
Access to such powerful data brings with it responsibilities, including ensuring that it is being used equitably. LexisNexis Risk Solutions product development recognizes the potential danger of structural inequalities built into the data that can lead to systemic bias against certain communities. If, for example, a marginalized community historically has lower life expectancy because of systemic healthcare barriers, an algorithm might unfairly classify individuals from that community as higher risk.
To test for bias and mitigate this risk, LexisNexis Risk Solutions deploys a methodology developed by the Consumer Financial Protection Bureau and Georgetown Law [3] aimed at detecting and preventing bias in financial services algorithms, including insurance underwriting and pricing.
Gangelhoff says LexisNexis Risk Solutions research indicates that Risk Classifier's automated data-driven approach to underwriting is not only helping insurers be more efficient but enabling more Americans to access the coverage they need, including undeserved communities such as families who have never had access to life insurance protection before.
Data from LexisNexis Risk Classifier carriers show that among individuals with low-risk scores within the Risk Classifier model (those likely to be approved for a life insurance policy), the percentage classified as Black has increased by an average of 53 percent over four years, while the percentage classified as Hispanic has increased by 38 percent. [4]
"Now there is proof in the pudding as to the lack of unfair bias, and it's actually demonstrating that we're enabling access to the insurance product," she says.
The 'Last Hug'
The life insurance process is not complete until beneficiaries receive the death benefit they're entitled to. In the case of policies that might have been initiated decades ago, such as that of Kennedy's father, there's no guarantee that beneficiaries know it exists or that they can be found, having often changed addresses, phone numbers and even perhaps their names over the years.
Nine out of 10 claims are usually resolved in a straightforward fashion. The final 10 percent require detective work on the part of the carrier, searching for beneficiaries whose information is incomplete or out of date. LexisNexis Risk Solutions brings essential information and analytics to that process, drawing on unstructured data from sources such as newspapers and obituaries.
"I lived it, and I've been touched by it," Kennedy says. "We're helping life insurance carriers make sure that beneficiaries are found quickly and that claims are paid promptly. The last thing any insurer wants is to have to escheat funds to a state - they want to see the policy proceeds paid to the person the insured wanted to protect."
From enabling access to policies to paying them out, the deployment of innovative products drawn from diverse data sources can help the life insurance industry realize its mission of supporting people in their time of greatest need.
Speaking of this sense of duty, Baker recalls a speech from the CEO of one life insurance company that particularly resonated.
"He said: 'When somebody dies, everybody's standing there with their hand out, getting ready to be paid: the tax man, the bank, and so on. We're the only ones that are standing there ready to give money back to them'. That's life-changing for everybody who's impacted."
