Allied National Streamlines Small Group Business Underwriting with Gradient AI

Gradient AI’s SAIL product enables the TPA to eliminate cumbersome individual health questionnaires from the small group underwriting process.

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Allied National (Overland Park, Ks.), a TPA specializing in the management and administration of non-ACA medical products for individuals and small group saw an opportunity for growth in the small group business. The challenge the company faced was in finding a more efficient solution than individual health questionnaires (IHQs) for collecting the data needed to underwrite and price the risk.

Allied National’s normal small group market is the sub 50 space (employee participants) and predominantly sub-25, according to Bill Ashley, the company’s CEO. Eliminating IHQs would allow Allied National to be more effective in the 20+ market, through quicker underwriting and eliminating the complexity of collecting and processing IHQs. “Our goal was to have a data-driven risk appraisal system that allowed us to eliminate IHQ underwriting for the 20+ market and where we believed the risk scoring would yield satisfactory underwriting results,” Ashley says.

Bill Ashley, CEO, Allied National.

In the summer of 2020, Allied National began conversations with vendors offering some sort of database-driven rate appraisal process, according to Ashley. “We choose one of three vendors to do a retroactive study of our current business as a proof-of-concept review,” he recalls. “After that was completed—with acceptable results, we were introduced to Gradient AI’s [Boston] SAIL product.  We then did a proof-of concept study with them that led us to believe the robust data set of medical and pharmaceutical claims made it a superior risk appraisal product.”

The key to Gradient AI’s SAIL product was the fact the database included both medical and pharmacy data, Ashley notes.  “That is unique, and can only improve the risk evaluation results,” he stresses.

Following selection of Gradient AI’s solution, Allied National designed an implementation initiative whose goals were the development of the full process of integrating SAIL, ensuring internal user adoption, and careful monitoring of initial results, such as frequency of declines, and distribution of rate offers as determined by its ratio to the manual process.

The roll-out process began in fall 2021, Ashley relates. “We involved people from product management, underwriting, sales and executive leadership in the roll out process,” he says.  “Other than support from Gradient AI, no external resources were required.  We took an ‘eyes open, heads up’ approach to implementation making sure we implemented well both as a process, but also for successful financial results.”

Ashley describes the implementation as going very well, noting that, “There are always some lessons to be learned and, in this case, it was getting comfortable with the various outputs from the SAIL system and how to integrate them into the underwriting decision process.”

Evaluating Results against Traditional Approach

Allied National went live with the SAIL-based solution before the end of fall 2021. “We did not initially promote the existence of the new underwriting approach, but applied it to qualified business submissions in parallel to the traditional IHQs we were receiving,” Ashley relates.  “This allowed us a chance to evaluate the results alongside our traditional approach and fine tune the process.”

Since launching the new solution, Allied National has been able to process roughly 200 groups in what Ashley describes as a “relatively efficient manner.”

“It certainly saved significant underwriting time,” Ashley acknowledges. “We were able to close a reasonable portion of cases.  It will take a year, or more, to determine if the risk evaluation process is yielding underwriting profits.”

Allied National will continue with the new process, based on Gradient AI’s technology, though any extension of the technology to other areas will depend on underwriting results, Ashley says.

Allied National Selects Gradient AI to Streamline Group Health Underwriting

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at or (503) 936-2803.

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