2015 cia annual meeting - middle market gap
TRANSCRIPT
Middle Market Protection Gap
Online Distribution – Kevin Pledge
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How much personal protection life insurance (by policy count) will be sold online 5 years from now?
1. 0 – 9%2. 10 – 19%3. 20 – 29%4. 30 – 39%5. 40 – 49%
6. 50 – 59%7. 60 – 69%8. 70 – 79%9. 80 – 89%10. 90 – 100%
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Agenda
1. Digital Disruption 2. Online Life Insurance in North America3. What is happening elsewhere?4. Can this be applied here?
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Digital Disruption
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Digital Disruption
10 years ago you would not dream of banking online – “it’s not safe”
5 years ago few people would buy groceries online
15 years ago Travel Agents would claim that you cannot book vacations online – “it needs a personal touch and experience”
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Life Insurance Industry - Barriers to EntryHighly Regulated Prudential oversight of insurance companies Capital adequacy Policyholder protection
Complex Infrastructure Systems Processes
Brand Reputation
LIFE INSURANCE IS SOLD NOT BOUGHT
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Trend - Agents 85% of consumers research insurance online Most consumers happy doing business online Disconnect to consumers – average age of agents
now 57
Insurance Gap - $20T in US, 1T in Canada 57% of families with children will have immediate
financial trouble if the primary wage earner died 50% of households believe they are underinsured
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Our Research Agents are not the first source for information Not a positive view of agents or insurance
companies“The broker is
needed to make the sale. They push you
(to buy) because they will make the
commission.”
“Life insurance companies want to sell
you more than what you
need.”
“First place I would go to is Google.”
“What are you getting? What are you really covered for? What are your options? No one tells you.”
“I would go on the internet and research companies through forums.”
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Industry Performance
Key Metrics:
Time to Issue47 days* (including appointment)
Cost $500 - $747** + commission
Capacity Depends on number of agents
Sources: * 2009 LOMA Service Turnaround Times Survey – Term Products: 47 days**SOA 2010 Expense Study Average Per Policy $500 weighted, $747 unweighted
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Life Insurance Industry - Barriers to EntryHighly Regulated Prudential oversight of insurance companies Capital adequacy Policyholder protection
Complex Infrastructure Systems Processes
Brand Reputation
LIFE INSURANCE IS SOLD NOT BOUGHT
innovation
The myth that
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Online Life Insurance in North America
The Problem : The traditional new business process is not customer friendly
Indicative Quote
Underwrite
IssueOfferAdd’l Q’s
Modify Application
Apply
Underwrite evidence
Further Questions
multiple hand-offslack overall process control
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Simplified Issue
Indicative Quote
ApplyUW at claim!
Customer pays for convenience – speed of issue Anti-selection risk
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Would anyone else do this?
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Would anyone else do this?
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Quick Issue
Indicative Quote
Underwrite
IssueOfferAdd’l Q’s
Modify Application
Apply
Underwrite evidence
Further Questions
Indicative Quote
Apply
OR
Answer a few questions and we may issue immediately(but the chances are we won’t)
Refer to agent otherwise
Good(at least to industry insiders)
…but not great
Accelerate existing processes
70% will take more than a week
More than half will take more than two weeks
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Is there a better solution?Simplified Issue - Quick Issue – Accelerate existing processes
All have issues
Why do you want to sell online? You can’t just do what you do today online
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What is Happening Elsewhere?
“The future is here, it’s just not very evenly distributed”
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Beagle Street
UK New entrant – not really an insurance companyNot encumbered by existing distributionOnline onlyNo advertising for first two years
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The Beagle Street Approach
Indicative Quote
Buy
Apply and UW
Fully UnderwrittenNo fluids or additional evidenceCover up to £750kBetter lapse experienceAve issue time 12 minutes
5,000x faster
1/10 of the cost
∞ scalable (85% of the time)
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What about barriers to entry?
Not an insurance company Focus on distribution Partnerships – Reinsurer, Traditional Insurer,
Software
No complex systems Focus on distribution – outsource the rest
Fresh approach to branding…
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www.acceptiv.com/CIA2015
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Can this be applied in North America?
Market research tested
“Almost half of participants found the value proposition [to buy directly online] very appealing (rating of 8 or more out of 10); these results are encouraging.
Years ago, when evaluating consumer interest in the ING Direct value proposition, our goal was to find interest in only half as many target group members (who we defined as innovators).”
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Survey results
0 - 9% 10 - 19% 20 - 29% 30 - 39% 40 - 49% 50 - 59% 60 - 69% 70 - 79% 80 - 89% 90 - 100%
0
5
10
15
20
25
30
35
40
ASNA (ave 43%) CRC 1 (ave 36%)CRC 2 (ave 35%) LAS (38%)
Percentage of life insurance sold online 5 years from now
Pe
rce
nta
ge
of
vo
tes
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10 – 30 year term insurance, up to $500k Coverage age range 18 - 70 Applied UK experience and P&C lessons Simpler, yet more flexible than current
products No medical evidence referrals Online, with offline support if needed On cover in 15 minutes or less
Full UW + Lower cost = Lower premium
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T10 - $13.42T20 - $21.08
Online Quote, Application and BuyAutomated underwriting immediate decision including rating if applicable
T10 - $18.65T20 - $24.80
Online Quote and ApplicationSimplified and Manual Underwriting
T10 - $20.00T20 - $26.04
Online Quote and ApplicationBasic auto and Manual Underwriting
T10 - $20.10Online Quote and ApplicationBasic auto and Manual Underwriting
T10 - $20.30T20 - $30.69
Online QuoteManual Application and Underwriting
Where did this put Teachers Life?
Insurance
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Threat or opportunity?
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$1T uninsure
dSynergy
400kterm
policies
800k
individual life
policies
